The Demographics of Those Left Behind By Obamacare – They May Not Be Who You Think
Uninsured rates continue to reach historical lows under the Affordable Care Act. Gallup reported that in the first quarter of 2016, the uninsured rate among U.S. adults reached 11 percent.1
It may be good news that an estimated 20 million have obtained health insurance since the Affordable Care Act took effect in 2010.2 Medicaid expansion, government exchanges that offer financial assistance to those who qualify, allowing young adults to remain on their parents’ health insurance plans, and guaranteed issue coverage (i.e., requiring plans to cover everyone, regardless of health history) have all contributed to making this possible.3
However, there are still an estimated 27 million people without health insurance. Who are they, and why aren’t they insured yet?4
Demographics of the remaining uninsured in 2016
The uninsured rate has declined most among Hispanics and persons making less than $36,000 per year. Yet, Hispanics, who as a group make up about 17 percent of the US population, account for 40 percent of those without coverage, making them the largest uninsured population.5,6 And, furthermore, not every state has expanded Medicaid, leaving about 2.9 million people what is known as the coverage gap.7 People in the coverage gap do not qualify for Medicaid based on their state’s current criteria and do not have incomes that reach the lower limit of premium tax credit eligibility under the ACA so they are left paying the full premium for their health plan with no government assistance.
The Henry J. Kaiser Family Foundation estimates that, as of 2016, approximately 27 million nonelderly people lacked health insurance. They estimated that this population breaks down approximately as follows8:
- 11.7 million people (43 percent of the uninsured population) are eligible for financial assistance to gain coverage through either Medicaid or subsidized coverage through the government exchanges
- 5.4 million are ineligible for coverage due to immigration status
- 4.5 million are ineligible for financial assistance due to ESI offer (i.e., employees’ state insurance)
- 3 million are ineligible for financial assistance due to income
- 2.6 million fall into the coverage gap where they do not meet state Medicaid eligibility requirements and earn too little to qualify for ACA subsidies
These figures do not reveal how many of these uninsured are exempt from the ACA’s individual shared responsibility provision or how many have opted for alternative coverage options such as short-term medical, faith-based healthcare sharing plans or lower cost fixed indemnity plans.
There are, of course, many reasons people choose not to purchase a health insurance plan. Some may object to the ACA based on personal political or philosophical beliefs or they may simply decide that their money is better spent on purchases other than health insurance.
Others may be unaware of the help available to them. A recent Commonwealth Fund survey found that nearly 40 percent of the uninsured did not know about the marketplaces and nearly 50 percent did not know about the financial assistance they offer.9 And some may look at the high deductibles associated with Bronze and Silver plans and decide that the protection is not worth the price, especially in the event of a high-dollar claim due to accidents or a serious illness.
Obamacare and the middle-class
While the financial impact of purchasing an individual health insurance may have decreased for some thanks to ACA subsidies in the form of premium tax credits, that hasn’t been the case for everyone who buys their own health insurance. Though we don’t know how many, some of those 3 million people who don’t qualify for financial assistance10 are possibly paying more for coverage. Several studies have showed a significant increase in individual, private-market premium rates since 2013.11 Even Bill Clinton recently called the health insurance premium hikes experienced by the middle-class “the craziest thing in the world.”12
So what is the solution? For some, it’s picking the least expensive plan available. For others, it’s deciding to opt out and take the 2017 tax penalty (i.e., individual shared responsibility payment) if they don’t qualify for an exemption. Of course, those are just a few actions people take despite potential financial exposure to medical bills.
Those feeling pinched by Obamacare premium rates may want to work with a health insurance producer to find solutions tailored to their situation. Additional products such as hospital (i.e., fixed) indemnity, critical illness, and medical gap plans may help reduce out-of-pocket expenses, and a licensed producer can provide quotes for various options and scenarios.