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Q&A: Explaining the health care coverage gap

Lawmakers and advocates regularly refer to Mississippians without health insurance who are in the “coverage gap.” But what is the coverage gap, why does it exist and how does it relate to Medicaid expansion?

What is Medicaid?

Medicaid is a federal-state program that provides health coverage to millions of people in the U.S., including low-income adults, children, pregnant women, elderly adults and people with disabilities. States administer the program, which is funded by both states and the federal government. Mississippi participates in the traditional Medicaid program, but the Legislature is debating two differing proposals that would expand Medicaid.

What is the coverage gap?

The coverage gap refers to a certain group of uninsured people in states that have not expanded Medicaid under the Affordable Care Act, the federal health reform law enacted in 2010 under the Obama administration. 

The law sought to make health insurance affordable and accessible to more people and provides subsidies that lower costs for households with incomes between 100% and 400% of the federal poverty level, or between $18,210 and $72,840 in annual income, respectively, for an individual.

The Affordable Care Act also expanded Medicaid eligibility to adults under 64 years of age with income up to 138% of the federal poverty level – or $20,782 annually for an individual in 2024. But a U.S. Supreme Court ruling in 2012 made expansion optional, creating the “coverage gap” in states that did not opt to expand the federal-state program.

Why does it exist?

In Mississippi and the nine other states that have not expanded Medicaid, there is a gap between people whose income is not low enough to qualify for non-expanded Medicaid but less than 100% of the federal poverty level, or about $15,000 a year for an individual, to qualify for subsidized insurance through the federal marketplace. To qualify for Medicaid in Mississippi under current regulations, one’s household income must be less than 28% of the federal poverty level, or a mere $7,000 annually for a family of three. Non-disabled childless adults are not eligible for Medicaid unless they have another qualifying condition. 

How many people fall into the coverage gap?

Roughly 74,000 Mississippians fall into the coverage gap, according to a recent KFF study. Nationally, the number is 1.5 million people.

What is Mississippi’s uninsured population? 

Mississippi had one of the highest uninsured rates among working-age people in the country in 2022 at 16.4%, according to the U.S. Census Bureau’s American Community Survey. 

Are people in the coverage gap employed?

In 2019, of the 178,000 uninsured Mississippians making below 138% of the poverty level, the majority – nearly 61% – were either working or looking for work. Many of those not in the labor force are unable to work due to a mental health or medical condition; lack of transportation; caring for a family member or recent incarceration, among other circumstances. More recent years’ data has been skewed because of the COVID-19 pandemic and extended Medicaid coverage for people who would not have otherwise been eligible.

Nationally, according to KFF, the most common jobs of people in the coverage gap are cashiers, cooks, waiters-waitresses, construction/laborers retail salespeople and janitors.

What keeps businesses from offering health insurance to its employees or from offering it with reasonable deductibles?, according to Hilltop Institute at the University of Maryland, Baltimore County

Larger employers – those with over 50 employees – are required to offer health insurance to their employees or pay a penalty. For smaller employers, offering health insurance is not mandatory. And because it is often more expensive, smaller employers will offer benefits with higher deductibles and copays in order to reduce their own expenses. So those employed at a small business either may not have the option of health insurance or may choose to opt out because of cost.

Nearly 69% of private businesses in Mississippi employ fewer than 50 employees, according to the Agency for Healthcare Research and Quality. It’s up to 95% when public employees are included, according to Hilltop Institute at the University of Maryland, Baltimore County.

How many people would the House and Senate plans make eligible for Medicaid, and how many of those are in the coverage gap?

The House plan – which is traditional expansion under the Affordable Care Act and would make Mississippi eligible for hundreds of millions of federal dollars – is estimated to cover 200,000 Mississippians. That would include people in the coverage gap and others.

The Senate plan – which is not traditional expansion and does not qualify the state for the federal match – would insure about 40,000 Mississippians. This would include only people in the coverage gap, or only those making up to 99% of the federal poverty level.

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