Alyssa Lane
The Medicaid coverage gap refers to the disparity in healthcare coverage for low-income Americans in states that have not expanded their Medicaid programs. This gap affects approximately 1.4 to 1.5 million people, primarily in Texas, Florida, and Georgia, who are typically adults without dependent children. These individuals have incomes above the Medicaid eligibility threshold in their state but fall below the poverty line, making them ineligible for Medicaid or Affordable Care Act (ACA) Marketplace subsidies. The ACA was designed to ensure no coverage gaps for low-income individuals, but the lack of Medicaid expansion in certain states has inadvertently created this gap, leaving many without access to affordable healthcare. To address this issue, states need to expand their Medicaid programs to include these individuals, providing them with much-needed financial assistance for their health insurance.
| Characteristics | Values |
|---|---|
| What is the Medicaid coverage gap | The "coverage gap" exists because the ACA's premium tax credits (premium subsidies) are only available for people with a household income of at least 100% of FPL, up to 400% of FPL. |
| Who does it affect? | People with income below the poverty line, including many working adults, people of color, and those with disabilities. |
| How many people are affected? | Approximately 1.4-1.5 million uninsured individuals in the ten states without Medicaid expansion remain in the "coverage gap". |
| Which states are affected? | Texas, Florida, Georgia, and six other states that have not adopted Medicaid expansion. |
| Why does the coverage gap exist? | The ACA did not create the coverage gap; it was caused by states' decisions not to expand Medicaid. |
| What is the impact of the coverage gap? | Individuals in the coverage gap are often unable to afford health insurance and may have difficulty accessing preventive care and treatment for major health conditions and chronic diseases. |
| How can the coverage gap be addressed? | Expanding Medicaid in all states would help close the coverage gap and provide insurance coverage for more individuals. |
| What is Medigap insurance? | Medicare Supplement Insurance (Medigap) is extra insurance that can be purchased to help pay out-of-pocket costs in Original Medicare. |
| Who can buy Medigap insurance? | Individuals who have Original Medicare (Part A and Part B) can buy Medigap insurance during their Medigap Open Enrollment Period. |
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What You'll Learn
Who is affected by the Medicaid coverage gap?
The Medicaid coverage gap affects uninsured adults with low incomes who are unable to qualify for Affordable Care Act (ACA) marketplace assistance. This is because their incomes are below the poverty line, but they are ineligible for Medicaid as their state has not adopted the ACA Medicaid expansion. As of March 2023, there were 1.9 million people in the coverage gap across ten states, with 97% living in the Southern US. Texas has the largest population in the cohort, accounting for 41% of people in the coverage gap.
The coverage gap only exists in states that have not expanded Medicaid. When the Affordable Care Act was written, it included the expansion of Medicaid to adults under 65 with household incomes up to 138% of the federal poverty level. However, the Supreme Court later ruled that this expansion was voluntary for states. As a result, some states have not expanded their Medicaid programs, leaving a gap for adults with incomes below 100% of the federal poverty level who don't qualify for Medicaid based on disability, age, or other factors. Their incomes are too high to qualify for Medicaid in their states, but too low to qualify for financial help in the ACA marketplaces.
The coverage gap includes non-elderly people with incomes below the federal poverty line, making them ineligible for subsidized marketplace insurance under the ACA. It also includes childless adults who are ineligible for Medicaid regardless of income in these states, except for Wisconsin, which permits Medicaid coverage via waiver. Childless adults account for 76% of the coverage gap, and people of colour account for around 61% of the cohort.
Closing the coverage gap would reduce ethnic and racial disparities in health coverage, improve health care access and financial security for many adults with low incomes, and reduce uninsured rates.
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Why does the coverage gap exist?
The coverage gap exists because the ACA's premium tax credits (premium subsidies) are only available for people with a household income of at least 100% of the federal poverty level (FPL), up to 400% of FPL. Premium subsidies are not available below 100% of FPL. When the ACA was written, Medicaid expansion was an integral part of the law, and it was assumed that subsidies would not be needed below 100% of FPL, as Medicaid would be available instead. However, in states that have not expanded Medicaid, there is a gap in coverage for residents with incomes below 100% of FPL.
As of March 2023, 40 states and the District of Columbia have adopted Medicaid expansion, while 10 states have not. The majority of people in the coverage gap reside in Texas, Florida, and Georgia. The coverage gap disproportionately impacts people of color, particularly in the Southern United States, where almost all states have maintained their pre-ACA Medicaid eligibility guidelines.
The Medicaid coverage gap includes non-elderly people with incomes below the FPL, making them ineligible for subsidized marketplace insurance under the ACA. Their incomes are higher than their state's limit for Medicaid eligibility, as their state has not adopted Medicaid expansion. The gap also includes childless adults who are ineligible for Medicaid, regardless of income, in these states, except for Wisconsin, which provides coverage through a waiver.
The ACA intended for low-income adults to access healthcare coverage through Medicaid. However, states that have decided not to expand Medicaid have left health insurance inaccessible to many Americans, resulting in millions of uninsured people. The coverage gap can be avoided by moving to a state that has expanded Medicaid or increasing income to at least the FPL to obtain subsidized health coverage.
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How many people are in the coverage gap?
The number of people in the coverage gap varies across sources. According to the Kaiser Family Foundation, there are about 1.9 million people in the coverage gap across nine or ten states. Another source puts the number at 1.4 million uninsured individuals in the coverage gap in the ten states that have not expanded Medicaid. A third source estimates the number to be over 1.6 million uninsured adults with low incomes in the coverage gap. One source mentions that there are 2 million adults in the current Medicaid gap.
The coverage gap exists in states that have not adopted the Affordable Care Act's (ACA) Medicaid expansion. Under the ACA, Medicaid was expanded to cover adults with incomes up to 138% of the federal poverty level (FPL). This income threshold applied to parents and adults without dependent children, who were previously not eligible for Medicaid. In non-expansion states, even part-time work can make parents ineligible for Medicaid.
The gap includes childless adults who are ineligible for Medicaid regardless of income in these states, except for Wisconsin, which permits Medicaid coverage through a waiver. As of March 2023, the ten states with residents in the coverage gap are Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming. Texas has the largest population of people in the coverage gap.
The coverage gap primarily affects low-income adults, with about one in six people in the gap having a functional disability. The share of people in the gap with disabilities increases with age. Adults aged 55 to 64, who often face increased healthcare needs, account for 17% of all people in the gap. Closing the coverage gap would increase health insurance coverage, reduce racial health disparities, and improve healthcare access, health outcomes, and financial security.
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Which states have the most people in the coverage gap?
The coverage gap exists in states that have not adopted the Affordable Care Act's (ACA) Medicaid expansion. The ACA expanded Medicaid to cover adults aged 19 to 64 with incomes up to 138% of the federal poverty level (FPL). However, the Supreme Court ruled in 2012 that states could choose whether to adopt this reform, resulting in a coverage gap in states that have not expanded Medicaid.
As of March 2023, 40 states and the District of Columbia have adopted Medicaid expansion, leaving 10 states that have not. An estimated 1.4 to 1.9 million Americans in those 10 states are within the Medicaid coverage gap. The majority of people in the coverage gap live in Texas, Florida, and Georgia, with Texas having the largest population in the cohort, accounting for 41% of people in the coverage gap. Other states with significant populations in the coverage gap include Alabama, Mississippi, and South Carolina.
The coverage gap primarily affects childless adults, who account for 76% of the cohort, and people of color, who account for around 61%. The median income limit for eligibility in the traditional Medicaid program in non-expansion states is 38% of the FPL, which is significantly lower than the ACA's expansion threshold of 138% of the FPL. This results in many adults with low incomes being unable to qualify for Medicaid or affordable private insurance, leaving them in the coverage gap.
Expanding Medicaid in the remaining 10 states would help ensure that more people with low incomes have access to healthcare coverage and important healthcare services. It would increase health insurance coverage, reduce racial and ethnic health inequities, and improve healthcare access and financial security for many adults with low incomes.
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What is the racial breakdown of those in the coverage gap?
The racial breakdown of those in the coverage gap varies across states. In 2016, 52% of the 1.4 million uninsured poor White adults in the coverage gap resided in Texas (19%), Florida (18%), North Carolina (9%), and Georgia (6%). 61% of the 0.9 million uninsured poor Black adults in the coverage gap resided in Georgia (19%), Texas (16%), Florida (14%), and Louisiana (11%). Among Hispanics, 78% of the 0.7 million uninsured poor adults in the coverage gap resided in Texas (52%) and Florida (27%). Overall, nearly three-quarters of adults in the coverage gap live in just three Southern states: Texas (42%), Florida (19%), and Georgia (14%).
In 2014, African Americans and Native Americans with substance use disorders who met new federal eligibility criteria for Medicaid were less likely than those of other racial and ethnic groups to live in states that expanded Medicaid. The uneven expansion of Medicaid may exacerbate racial and ethnic disparities in insurance coverage for substance use disorder treatment.
The Affordable Care Act's (ACA) Medicaid expansion has helped narrow longstanding racial disparities in health coverage and access to care for people of color. In expansion states, the gap in uninsured rates between White and Black adults shrunk by 51% (versus 33% in non-expansion states), and the gap between White and Hispanic adults shrunk by 45% (27% in non-expansion states). Expansion states have narrowed the gaps in uninsured rates between Black and Hispanic people and White people far more than states that haven't expanded.
In states that have not expanded Medicaid, many poor adults fall into a coverage gap and will likely remain uninsured. Poor uninsured Black adults are disproportionately affected, as they are more likely to reside in Southern states, where most states are not implementing the expansion.
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Frequently asked questions
The "coverage gap" exists because the ACA's premium tax credits are only available for people with a household income of at least 100% of the federal poverty level (FPL). This means that in states that do not offer Medicaid to adults with income under the poverty level, non-disabled childless adults and parents with incomes below 100% of FPL are not eligible for any financial assistance to help them afford health insurance.
According to KFF data, there are about 1.4-1.5 million people in the coverage gap across the nine or ten states that do not provide Medicaid coverage for adults with income under the poverty level.
Texas, Florida, and Georgia account for almost 1.1 million of the people in the coverage gap.
The coverage gap is entirely caused by certain states' decision not to expand Medicaid. When the Affordable Care Act was written, it was assumed that subsidies would not be needed below 100% of FPL, since Medicaid would be available instead.
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