Medicaid coverage gap

Under the public healthcare policy of the United States, some people have incomes too high to qualify in their state of residence for Medicaid, the public health insurance plan for those with limited resources, but too low to qualify for the premium tax credits that would subsidize the purchase of private health insurance. These people are described as falling into the Medicaid coverage gap.

The 2010 Affordable Care Act (ACA) aimed to ensure universal health care through a number of mechanisms. It expanded Medicaid by raising the income threshold for eligibility to 138 percent of the federal poverty line (FPL) among nonelderly adults. For those with income above the FPL who do not receive affordable health insurance from an employer, the ACA established premium tax credits that would subsidize the cost of buying private insurance through health insurance marketplaces.

State participation in Medicaid is theoretically voluntary, although all states have participated since 1982. The program is funded jointly by the state and Federal governments, though the Federal government pays for the vast majority of the ACA expansion; the framers of the ACA assumed that all states would continue to participate in the newly expanded Medicaid, which is why subsidies for private insurance are only available for those with incomes above the FPL. Nevertheless, opponents of the ACA asserted that the federal government's conditioning of continued funding for Medicaid on adoption of expansion was unconstitutionally coercive. The Supreme Court held in National Federation of Independent Business v. Sebelius that adoption of Medicaid expansion by states was effectively optional, and that states could continue with their preexisting Medicaid requirements without risk of defunding. In many of the states that chose to reject the expansion, only those making significantly below the FPL qualify for Medicaid; this has led to a "gap" in coverage for residents of those states with incomes that are too low to qualify for private insurance subsidies and too high to qualify for the non-expanded Medicaid.

As of March 2023^[update], 40 states and the District of Columbia have adopted Medicaid expansion, leaving 10 states that have not. An estimated 1.9 million Americans in those 10 states are within the Medicaid coverage gap according to the Kaiser Family Foundation. Approximately 97 percent of this cohort lives in the Southern U.S., with a majority living in Texas and Florida; Texas has the largest population of people in the cohort, accounting for 41 percent of people in the coverage gap.^[2]