Because the authors of the Affordable Care Act saw no issue with the expansion of Medicaid and presumably found it constitutional, they wrote the exchange subsidies as affecting everyone above the rate of Medicaid, specifically about the federal poverty level (FPL). But what about people who make below the poverty level? They may be ineligible for subsidies, but that’s OK, because they can always hook up with Medicaid, which is now expanded to 133% FPL. However, if the part of the ruling reducing the leverage for the federal government to extend this Medicaid expansion to the states winds up in big fights among red-state governors, those under 100% FPL could find themselves out of luck:
I said this morning that people would go into the insurance exchanges where they’ll collect subsidies to be able to afford insurance. This is true for people earning between 100% and 133% of the Federal Poverty Line but it looks like there’s a fair chance that people will be ineligible for tax credits if they’re earning less than 100 percent of the FPL. Most such people in most states will, I repeat, end up covered by Medicaid anyway because the carrot is enticing. But some of them will end up with hardship waivers and no insurance.
Most states where this would come into play, i.e. red states, currently have Medicaid programs that fall far short of 100% of the FPL. For example, in Texas, a working parent is ineligible for Medicaid above 27% of FPL. So if Rick Perry in Texas decides not to accept the Medicaid expansion, all working parents between 27% and 100% of FPL have a hardship exemption, so they don’t have to buy insurance, but they have no way to capture subsidies for the purchase of insurance. So they’ll be locked into remaining uninsured.
I’d like to see some analysis on the vulnerabilities this will provide. But it’s not the case that the poor will have the option of either Medicaid or the exchanges. They might end up out of luck. This outcome, of course, all depends on whether governors reject the Medicaid expansion in favor of keeping their old Medicaid systems in place.