There is an interesting new blog post over at Health Affairs, which estimates the number of uninsured residents in each state before and after Obamacare—including the impact for each state if it does or does not expand its Medicaid program as called for by Obamacare.
In Indiana, that decision rests entirely on whether Gov. Mike Pence can convince the Obama administration to allow Indiana to use its Healthy Indiana Plan to expand Medicaid, rather than the traditional Medicaid programs. Pence thinks his plan can save the state money by helping low-income Hoosiers be better consumers of health care, although many dispute this notion.
The fate of 232,000 Hoosiers hangs on those negotiations, according to the estimates from researchers at Harvard University and the City University of New York, who authored the blog post.
Here’s how their math breaks down. There were 764,000 uninsured Hoosiers before the implementation of Obamacare, also known as the Patient Protection and Affordable Care Act.
That number is projected to fall to 623,000 after Obamacare’s subsidies to help low- and moderate-income households buy insurance kick in next year. Those subsidies, funded by various tax hikes, will help families making 100 percent to 400 percent of the federal poverty limit buy health insurance via new exchanges, or online marketplaces.
The federal poverty limit for a family of four is currently $23,550.
But those subsidies will not apply to families making less than the federal poverty limit. And in Indiana, most adults (other than moms with kids) are not covered by Medicaid unless their household incomes are a mere 25 percent of the federal poverty limit, or less than $6,000 for a family of four.
So the people with household incomes between about $5,900 and $23,500 will have only the options they currently have. And those options leave many of them uninsured.
Of course, another part of Obamacare will now require those individuals to obtain health insurance—a requirement they do not face now.
But the impact of this “individual mandate” will be muted by two factors. First, Obamacare includes a hardship exemption for families who would spend more than 8 percent of their income on even the cheapest health insurance available.
Second, the penalties for not buying health insurance start out extremely small—just $95 for an individual in the first year—and the bill provides no additional funding for the Internal Revenue Service to enforce compliance with the mandate.
Those nuances were supposed to be incorporated into a model developed by the Congressional Budget Office, which the Harvard and CUNY researchers used to make their predictions.
If Indiana does expand its Medicaid program to cover families with incomes up to 138 percent of the federal poverty limit—as called for by the Obamacare law—the researchers predict the number of uninsured Hoosiers would shrink to 391,000.
The reason Indiana has a choice in the matter is that the U.S. Supreme Court declared a year ago that the Obama administration could not force states to expand their Medicaid programs by threatening to withhold all Medicaid funding if they did not.
Viewed in percentage terms, nearly 12 percent of Indiana’s 6.5 million people are currently uninsured. The onset of Obamacare, including an expansion of Medicaid coverage, would cut that number by nearly half, to 6 percent.
But if Indiana does not expand Medicaid coverage, its uninsured population will remain at nearly 10 percent.
It’s that difference of 4 percentage points that the Pence and Obama teams must weigh. Neither side likes the other’s preferred policy, but they’ll have to decide whether insurance coverage for 232,000 is worth a compromise or not.