Contrary to claims by some critics, the Medicaid expansion in the new health reform law will overwhelmingly provide coverage to people who otherwise would be uninsured, rather than shift people who already have private coverage to Medicaid.
Under the new law, beginning in 2014 Medicaid will cover non-elderly individuals with incomes up to 133 percent of the federal poverty line — about $29,000 for a family of four.[1] The Congressional Budget Office (CBO) estimates that by 2019, 16 million more adults and children will enroll in Medicaid and gain access to affordable coverage as a result.
Some critics claim that a large share of the insured individuals who become eligible for Medicaid will drop their existing employer or individual market coverage and instead enroll in Medicaid. This claim does not withstand scrutiny: there has been only modest substitution of public for private coverage, or “crowd-out,” in similar state-level expansions of public programs in the past.[2]
- In states that have raised Medicaid income eligibility limits to levels similar to those under health reform, the shares of low-income residents who have private coverage are virtually identical to the shares in states that have not expanded Medicaid coverage.
- An extensive body of research finds that among low-income children enrolled in Medicaid, the proportion that previously was privately insured is between 10 percent and 20 percent, nowhere near the 48 percent rate assumed, for example, in a dubious analysis commissioned by the state of Indiana that some health reform critics have cited (see below).
- The vast majority of low-income individuals who will become eligible for Medicaid under health reform do not have access to affordable private health insurance coverage.
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