The Coverage Gap and the Welcome Mat Effect
By Caitlin Shea, CPPP Research and KIDS Count Intern
What is the coverage gap?
The Affordable Care Act (ACA) was written to provide affordable health coverage to adults through two primary mechanisms: a Medicaid expansion for low-income adults, and Marketplace subsidies for adults living above the poverty level. However, a 2012 Supreme Court decision made the Medicaid expansion optional, and Texas chose to opt out, effectively creating a “coverage gap” for the nearly one million Texas U.S. citizen adults living below the poverty level who are also ineligible for subsidies.
How does the coverage gap affect Texas kids?
In the United States, health care for kids whose family income is 400% of the poverty level or less is structured as a universal, income-dependent continuum of care – meaning that, in theory, nearly all children should have access to affordable health care (relative to their family’s budget).
Despite this, in 2013, 13.4 percent (975,001) of Texas children lacked insurance. Compared with their insured peers, uninsured kids are more likely to skip regular check-ups, miss out on critical preventative care, and generally experience worse physical, mental and emotional health outcomes.
How can the Welcome Mat Effect help Texas kids?
So, why do kids remain uninsured? While there are several reasons, from policy hiccups to difficult-to-navigate red tape, a key driver is a lack of awareness among parents about child insurance options and eligibility. Research shows that an effective way to overcome this hurdle is to expand Medicaid to low-income parents. In doing so, states often create a “welcome mat effect,” alerting parents to their child’s eligibility for Medicaid or CHIP, connecting them with the health insurance infrastructure, and increasing child insured rates. One study linked a late-1990s wave of state-led Medicaid expansions for low-income parents with a 20 percentage point bump in eligible-child Medicaid participation.
Texas has already seen a small welcome mat boost thanks largely to a Marketplace mechanism that automatically refers eligible kids to CHIP or Medicaid. However, in a state like ours, where more than half of all uninsured children are eligible for Medicaid or CHIP, we’re missing a huge opportunity by not closing the coverage gap and putting the welcome mat out for everyone.
Several members of the Texas Legislature are currently championing efforts to find a coverage solution. However, without strong and comprehensive action by current Legislative leadership to see proposals through to passage, nearly one million low-income Texans will continue to be effectively denied access to coverage. The Governor and our state elected officials should work together to find a Texas approach to solving the Coverage Gap, and in the process, improve health outcomes for both Texas adults and kids. Undocumented immigrant children are not eligible for Medicaid, CHIP, or Marketplace insurance.  Children’s Medicaid and CHIP have baseline eligibility thresholds at 133% and 200% of the FPL respectively. However, under ACA, an across-the-board 5 and 6 percentage point earnings disregard is applied which bumps the effective Medicaid and CHIP eligibility threshold up to 138 and 206 respectively.  Under ACA, parents are required to provide at least “minimal essential coverage” for their children. So, as parents get connected to the health infrastructure, the welcome mat effect becomes a welcome mat mandate.  Compared with states that did not expand parental Medicaid eligibility.