What are states doing for millions of adults who can't get Medicaid?

It's a common misconception held by many Americans: If you're poor, Medicaid is available to you. In many cases, that's just not true.

The uninsured "tend to come up pretty high on the list on the things people care about," but there is a big misconception, says Sonya Schwartz, a program manager with the National Academy for State Health Policy in Washington, DC, "People assume we have programs in place where all low-income people get help. They don't realize that there are holes in that safety net," she says.

One group in particular—low-income adults without children—has fallen through the cracks. "Unless a state has made its own effort to do something about this problem, nothing will be done," says Ms. Schwartz. "There is no standard at the federal level for what states have to do."

A new report looks at why, in fact, millions of low-income adults cannot get Medicaid and what can be done about it.

On the federal level, policy options to help low-income adults include expanding the Medicaid program with additional federal assistance, allowing Medicaid to cover all individuals below a certain income level, and allowing flexibility for states to include others in Medicaid.

"In my view, the best federal approach would give states the ability, via state plan amendment, to cover adults based on their income, without regard to category, and provide enhanced federal funding in a form that largely absorbs the resulting costs that states would incur," says Stan Dorn, the study's author and a researcher at The Urban Institute in Washington, DC.

Low-income childless adults comprise one-third of the uninsured population. "And these are just low-income adults. So if you go a little higher up, over 200% of [federal poverty level], you can cover even more of the uninsured. It's a lot of people," says Ms. Schwartz. "Also, we know that a large chunk of the uninsured is working—usually about 80% in most estimates."

Though working, this population is less likely to get offers of employer-sponsored coverage. "When we do something about coverage for low-income people, it makes a huge difference. That is not surprising, because there is nowhere else to go," says Ms. Schwartz.

States taking action

States are tackling this problem with varied approaches, with some using Medicaid waivers. "These programs depend on how the waiver was granted, and how much money the state could justify that it was rolling into the program—those have to be budget neutral," says Ms. Schwartz.

Depending on the state and Administration's policy at the time, some states have gotten a better deal than others because the waiver programs are all negotiated individually. Some states were able to roll unspent uncompensated care funds, or unspent State Childrens Health Insurance Program funds, into coverage and therefore are able to offer more comprehensive benefits. "Their programs may not be capped, and may provide more generous coverage," says Ms. Schwartz.

Other states have looked at this as a way to improve preventive care, or a way to try new kinds of benefits packages, or they may have very small programs that were capped. "Some states were very cautious fiscally—they may have just wanted to stick a toe in the water without going all the way in, either by limiting benefits or by limiting participation," says Ms. Schwartz. "Then there are programs that are completely state-funded, like Basic Health in Washington, which does have relatively comprehensive coverage."

Washington's Basic Health Plan started as a pilot program in the late 1980s with the goal of serving the working poor, and currently has about 106,000 enrollees. From the beginning it has been income-based, with eligibility for subsidized coverage limited to those at or below 200% of federal poverty level.

"It is a significant source of coverage for otherwise uninsured childless adults in Washington state," says Jonathan Seib, a policy advisor to Gov. Chris Gregoire in Olympia. "We do not preclude children, but there are other options available to them, so there are a smaller number enrolled."

Over the years, the benefits package has been adjusted, and been capped at different levels, depending on available state budget dollars and the advent of preauthorization requirements and evidence-based purchasing. Total enrollment also has been limited by available dollars, and peaked at about 135,000 several years ago.

The program also has "remained fairly popular on both sides of the aisle," says Mr. Seib. "The debates have not had to do so much with its value per se, but rather, the depth and breadth of the benefits. They haven't raised the question as to whether the program as a whole is something of value."

The state also has a high-risk pool which provides an option for those whose health status makes them unable to get coverage in the individual insurance market. "We have a unique situation in this state where we have a standard questionnaire developed by the high-risk pool board which every carrier is required to use," says Mr. Seib. "There is a statutorily drawn line in terms of eligibility—and if you are rejected for individual coverage, you automatically qualify for the high-risk pool, which is subsidized."

The maximum premium is capped at 150% of the market average, so it is a more expensive program, says Mr. Seib, leading to ongoing concerns that for too many people, it remains unaffordable. "But very few people would argue that it is not a good value," he says. "It is very comprehensive coverage."

In Washington, the third and newest of the state's coverage programs is called the Health Insurance Partnership. "It is our state's effort to address the insurance needs for employees of small business," says Mr. Seib. "There was legislation last session to tweak the program and make it operational, and it is set to go for next year."

The program is an insurance exchange and will use state dollars to leverage small business dollars in order to provide coverage to low-income workers. "This is where the subsidy will be targeted, but it also will be available without a subsidy to provide coverage to other small business employees," says Mr. Seib.

MinnesotaCare was created to provide affordable health coverage to Minnesotans who would not otherwise have access. This includes children, parents, and pregnant women whose incomes are too high to qualify for Medicaid, and to single adults who would not meet the eligibility requirements for Medicaid.

"It has helped the state maintain a low rate of uninsurance for residents," reports Brian Osberg, the state's assistant commissioner for health care. "The program has also been critical to the state's welfare reform strategy. It helps people to leave welfare and go to work, without losing health care coverage."

Who are you going to cover?

States first need to answer this question: Who are they intending to cover? For example, the "working healthy" has very different needs from the homeless. "Someone at 200% of the poverty level who may be working at Wal-Mart and can't afford their employer coverage may be healthy and may not need a lot of services at the time, although you never know what may happen," says Ms. Schwartz.

Another population in the childless adult group might be a homeless person who may not quite meet the definition of disability, or may have not gone through the whole process to be eligible for SSI benefits. That person may need different services from someone who is working, such as substance abuse services or mental health services, says Ms. Schwartz. "This is mostly about workers, but it may also be about other populations as well."

Contact Mr. Dorn at SDorn@urban.org, Ms. Schwartz at (202) 903-2785 or sschwartz@nashp.org, and Mr. Seib at (360) 902-0557 or jonathan.seib@gov.wa.gov.