Medicaid Expansion Would Not Collapse Private Insurance

April 24, 2013 at 4:53 pm

Louisiana Governor Bobby Jindal’s recent claims that expanding Medicaid will force people out of private coverage and into government health care are overblown.  The reality is this:  an overwhelming majority of people who would get coverage under a Medicaid expansion are low-income people who are uninsured, and they generally can’t afford private health care to begin with.

As we’ve noted before, states that expanded Medicaid in the past by raising income eligibility levels for adults reduced the ranks of the uninsured without undermining private coverage.  That’s based on an analysis of Census data and consistent with an extensive body of research.  In states that expanded Medicaid, about the same proportion of Medicaid-eligible adults had private coverage as in states that didn’t expand, but the expansion states had a much lower proportion of uninsured low-income residents.

Governor Jindal fails to recognize that many people who would qualify for an expanded Medicaid program under health reform work in low-wage jobs for small firms or service industries that typically don’t offer health insurance benefits.  In addition, coverage in the individual insurance market is unaffordable for most of those who would be eligible for the Medicaid expansion.  My colleague, Jesse Cross-Call, recently pointed out that:

  • 81 percent of workers earning less than 138 percent of the poverty line — the threshold for qualifying for Medicaid under health reform — don’t get coverage through their employer.
  • The median annual cost of single coverage in the individual market, including premiums and out-of-pocket costs, would consume more than one-third of the total income of a family of three at the poverty line.

The bottom line:  expanding Medicaid will not lead to low-income people dropping out of employer-based coverage.  But failure to expand would force them to remain uninsured and forego care.

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More About January Angeles

January Angeles

January Angeles is a Policy Analyst at the Center on Budget and Policy Priorities, focusing on Medicaid and state health policy issues.

Full bio | Blog Archive | Research archive at CBPP.org

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