Medicaid ‘doughnut hole’ leaves many working poor without healthcare subsidies

Posted Saturday, Sep. 28, 2013  comments  Print Reprints

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When Medicare was expanded in 2006 to include prescription drugs, the issue of the “doughnut hole” arose — a gap in coverage that could cost patients thousands of dollars before coverage resumed.

The Affordable Care Act will make that disappear in 2020. But the legislation, also called Obamacare, will create another unintended gap in health insurance for residents of Texas and other states that did not expand Medicaid.

Residents in this new “doughnut hole” make too much money to qualify for Medicaid but too little to qualify for subsidies on insurance bought through the state’s federally run Health Insurance Marketplace, more commonly called the exchange.

At least 1 million Texas residents will fall into that gap, said Stacey Pogue, senior policy analyst at the Center for Public Policy Priorities, an Austin-based organization that supports expanded public medical coverage.

Kathleen Sebelius, secretary of the Health and Human Services Department, called the gap “unconscionable” during a visit to Dallas on Thursday to promote the healthcare exchanges. She put the number of people who might be affected even higher, at 1.5 million to 2 million.

“Those are Texans that really won’t have access to affordable medical care,” she said at a west Dallas community clinic, flanked by Dallas Mayor Mike Rawlings and Dallas County Judge Clay Jenkins, who were supportive.

Texas and more than 20 other states have opted not to expand Medicaid. A separate estimate by The Urban Institute found that nearly 7 million Americans in those states fall into the gap between being eligible for Medicaid and qualifying for a tax credit.

When the Affordable Care Act was signed into law in 2010, it envisioned expanding state Medicaid eligibility up to annual household incomes of 133 percent of the federal poverty level, which is $11,170 for an individual and $23,550 for a family of four.

Then the U.S. Supreme Court, in a 2012 decision that mostly upheld the healthcare act, ruled that the federal government could not withhold existing Medicaid funds from states that reject the expansion.

Gov. Rick Perry has opposed the Affordable Care Act, and in an April statement, he called Medicaid’s expansion “a misguided, and ultimately doomed, attempt to mask the shortcomings of Obamacare.”

Medicaid, the healthcare program for the poor that is funded by the state and federal governments, basically covers low-income children, seniors, people with disabilities and pregnant women. For example, a family of three can make up to $3,255 a month and qualify for Texas Medicaid — but only the child or a pregnant woman is covered.

For adults in the household to be covered, that family of three would have to make no more than $251 a month, according to the state’s Health and Human Services Commission.

No children in the household? Able-bodied adults without children aren’t generally eligible for Medicaid in Texas.

That means single adults in Texas who make at least the federal poverty level can receive subsidized health insurance by going through the exchange. But those same people can’t get the subsidy if they make less than that.

In Tarrant County, 16 percent of residents live in a household under the federal poverty level.

Former President Bill Clinton, in a Sept. 4 speech, called that situation “the worst of all worlds.” He characterized it as: “I’m sorry, but you’re working 40 hours a week, but you’re too poor to get help. This is a serious problem.”

Individuals who are eligible for larger subsidies, such as for low-income households, can have the tax credit pay for all or nearly all the cost of a health insurance premium in some cases.

Last week, the federal government said that in North Texas, a family of four would pay just $26 a month for the lowest-cost plan after allowing for tax credits based on income.

Jim Fuquay, 817-390-7552 Twitter: @jimfuquay

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