The Supreme Court left millions of Americans uninsured: Here’s what Congress can do to cover them

Nearly 4 million Americans lack health insurance because of a 2012 Supreme Court decision that allowed states to opt out of the Affordable Care Act’s Medicaid expansion. In the coming weeks, Congress has a chance to clean up the mess the court’s decision created.

To understand what Congress can do now, it is useful to review how we got here. The Affordable Care Act required all state Medicaid programs to cover people with incomes up to 138 percent of the poverty line (currently just under $19,000 per year for a single person). Because all states participate in Medicaid, a joint state-federal program that provides health insurance to low-income people and people with disabilities, this provision was expected to ensure that all poor and near-poor Americans had access to affordable health insurance.

It did not turn out that way. A group of states sued, arguing that requiring them to expand Medicaid to this group of enrollees was unconstitutionally coercive. There were strong arguments against the states’ position, notably that participating in Medicaid remained voluntary for states and that Congress had routinely expanded Medicaid to new groups in the past. But the Supreme Court disagreed and allowed states to opt out of covering this low-income group.

Today, 12 states, mostly in the South, have not expanded Medicaid, even though expansion commands strong public support and the federal government would pay 90 percent of the cost (and more initially). As a result, non-elderly adults below the poverty line in these states, more than half of whom are Black or Hispanic, typically have no path to affordable insurance coverage. And while people just above the poverty line are generally eligible for subsidized coverage through the Affordable Care Act’s marketplaces, that coverage comes with higher out-of-pocket costs and, until recently, higher premiums than Medicaid coverage.

An irony of the court’s decision is that it created a “natural experiment” that has allowed researchers to obtain a remarkably clear picture of the consequences of Medicaid expansion by comparing trends in states that did and did not adopt expansion. This work has found that expanding Medicaid sharply increased insurance coverage. That, in turn, improved access to health care and, ultimately, health outcomes. Notably, economists Sarah Miller, Norman Johnson and Laura Wherry have estimated that Medicaid expansions averted around 19,000 deaths from 2014 through 2017, and that number has surely continued to grow in the intervening years.

Medicaid coverage virtually eliminates exposure to out-of-pocket health costs, so Medicaid expansions have also substantially improved financial security for low-income families, which has manifested in ways as varied as improved access to credit and lower eviction rates. Nor have the new Medicaid enrollees themselves been the only beneficiaries. Hospitals located in Medicaid expansion states saw their uncompensated care burdens fall dramatically as their uninsured patients gained coverage.

Congress could bring similar benefits to the 12 holdout states by stepping in and covering these states’ low-income residents directly. Legislation the House passed last fall would have expanded eligibility for subsidized marketplace coverage to people with incomes below the poverty line in states that have not expanded Medicaid. That legislation would also have ensured that these enrollees (and enrollees just above the poverty line who already qualify for subsidized Marketplace coverage) were eligible for coverage with minimal premiums and out-of-pocket costs comparable to what Medicaid offers.

Recent press reports indicate that congressional Democrats are making a final effort to reach agreement on a slimmed-down reconciliation package. There appears to be broad agreement on including provisions to reduce the prices of prescription drugs, which could in turn be used to finance measures that would expand insurance coverage and make coverage more affordable.

If such a package comes together, there is a significant likelihood that it will include an extension of the enhanced marketplace subsidies that Congress enacted in 2021, which are scheduled to expire at the end of this year. This step has a strong policy and political rationale: it would help preserve recent coverage gains, while averting big premium hikes – many borne by low- and moderate-income enrollees – that would become apparent just before this fall’s elections.

However, unless Congress simultaneously expands eligibility for subsidized marketplace coverage to people below the poverty line in states that have not expanded Medicaid, this step would do nothing for most of the people left behind by the court’s 2012 decision. Considering the proven benefits of insurance coverage for low-income Americans’ health and financial security, we owe them better than that.

Matthew Fiedler is a senior fellow with the USC-Brookings Schaeffer Initiative for Health Policy.