Minimum-Wage Earners Will Lose Medicaid, Enter Marketplace Under Health Care Revision

Mar 30, 2017
Originally published on April 26, 2017 9:07 am

Echo Soza lives at Our House, a homeless shelter for the working poor in Little Rock. The 47-year-old housekeeper was uninsured a few years ago when she had a stroke.    

“I actually was hospitalized and then lost my housing and then came here,” she says.  

Today, she has insurance because of Medicaid expansion. Regular visits with a doctor and prescription coverage have helped her get her high blood pressure, diabetes, and depression under control.

Soza is volunteering in the shelter kitchen, cleaning up after lunch. She's wrapping up sausages and cupcakes and carrying dirty trays in from the cafeteria. Soon she’ll be earning $8.50 an hour doing laundry full time at a hotel chain. She’s moving into an apartment.

Though she'll only earn about $16,000 a year, she'll make too much to stay on Medicaid expansion under the state's pending plan, which would cap eligibility at the current U.S. Census Bureau's poverty threshold — about $12,500 for a single dependent. Instead she’ll be eligible for insurance through the Affordable Care Act’s marketplace.

What that will mean for her ability to afford healthcare outside of Medicaid expansion remains unclear, and it depends partly on whether Congress ultimately repeals and replaces the Affordable Care Act. 
 

Arkansas Governor Asa Hutchinson is joining a handful of Republican governors around the country to pursue conservative modifications to their state programs, changes that had previously been blocked by the Obama Administration.

Hutchinson's plans to change Arkansas Works won't be impacted by the defeat of federal healthcare legislation last week. He seeks federal waivers to the program that will include new work requirements and a lower income ceiling for recipients who wish to qualify for Medicaid expansion.  

“You will see more people working and signing up for work and worker training, and you’ll see cost savings to the state and cost savings to the federal government.”

It’s part of his effort to reduce the state’s costs as the feds drop their Medicaid match rate from 95 to 90 percent or more by 2020.

If his federal waivers are approved, about 60,000 people who are above 100 and below 138 percent of the poverty threshold would get insurance through the marketplace.

Soza's expected income of about $16,000 is 128 percent of the poverty threshold.

“I don’t believe it,” says Eddie Pannell, retiring executive director of Little Rock’s Harmony Health Clinic which serves low-income and uninsured patients.

Pannell says the governor's revisions to Arkansas Works are harmful. Federal subsidies may not cover the costs for low-income people moved out of Medicaid expansion. (All of this depends on what, if anything, eventually happens in Congress with the Affordable Care Act.)

He says for people hovering just above the poverty line, leaving the Medicaid expansion pool for the marketplace will mean higher deductibles and new penalties for missing a bill.

“We’re seeing them now coming back to the clinic," he says about clients who are insured through the marketplace but struggling to afford premiums.

"They got in there, paid their first month premium, their car broke down, they’ve got to fix their car in order to get to work. And they didn’t pay their premium the next month and they were kicked off the exchange."  

The clinic lost nearly half of its uninsured clients after the ACA went into effect.

In fact, Arkansas, after Kentucky, saw the greatest drop in uninsured residents nationwide since 2013, according to data by the Gallup poll.  

The state’s hospital association says uncompensated costs in emergency rooms were cut almost in half. That actually kept some rural hospitals open. 

Health policy expert and CEO of the Arkansas Center for Health Improvement, Joe Thompson, says the Governor’s plan is a middle of the road Republican compromise that emphasizes personal responsibility.

“I think it’s politically easier to say we’re helping people below the poverty level. I think it clearly saves the state money.”

While the Governor wants to shrink the program, he is adamantly against federal cuts to Medicaid expansion.

If approved by the Department of Human Services, the changes would take effect January 1 of 2018. 

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