Obamacare in DC: What it Means
The U.S. Supreme Court upheld what has come to be known as “Obamacare,” opining that the Affordable Care Act’s individual mandate is constitutional — but making an important distinction that the law’s planned expansion of Medicaid is optional for states. You might be wondering how this ruling impacts the District. While many states are now scrambling to decide how to respond, DC has been a leader in expanding health insurance for its residents for years – and that has continued full-force as the city has aggressively moved forward in implementing the President’s health care law.
These efforts include taking up the Affordable Care Act’s option to expand Medicaid — government health coverage that is jointly paid for by federal and state government — sooner than the 2014 start date. DC is also one of several states far along in setting up a required new insurance marketplace called a “health exchange.” This is great because it will not only expand access to health insurance for working DC residents, but it will actually save the District money.
While the federal law calls on states to set Medicaid eligibility at 133 percent of the federal poverty level by January 1, 2014, the District already raised Medicaid eligibility to 200 percent in 2010, four years early. That eligibility level translates to $22,000 for an individual and $30,000 for a married couple with no children. This move was financially advantageous for the District, because DC has operated the locally-funded DC HealthCare Alliance for uninsured residents under 200 percent of poverty for over a decade. DC was able to move more than 30,000 residents from the Alliance to Medicaid, in which the federal government picks up 70 percent of the tab (DC’s federal Medicaid matching rate). This move also provided these residents with a broader set of health benefits offered by Medicaid as compared to the Alliance.
Things will change and get more complicated starting January 1, 2014, the date all states are expected to start implementing many of the coverage expansion and insurance market reforms under the Affordable Care Act. Here’s what it will mean for DC:
- For everyone who was Medicaid-eligible before the District implemented the expansion, coverage will remain largely the same with a few exceptions. This includes children and pregnant women with incomes up to 300 percent of poverty and parents with incomes up to 200 percent of poverty.
- For everyone else, Medicaid eligibility levels would drop to 133 percent of poverty (although the District has the option of keeping parents and some others in Medicaid above this 133 percent mark if it chooses). The federal government will pick up 100 percent of the costs for people in this group who became eligible as a result of the federal health care law, instead of the normal 70 percent. This will save the District money. The federal share will gradually step down to 90 percent over several years, but overall, still provides a financial savings for the city over that period.
- Residents above 133 percent of poverty won’t lose coverage, because they will be able to purchase coverage through the DC Health Insurance Exchange, the new insurance marketplace of standardized, high-quality plans made affordable through insurance reforms. Families with incomes up to 400 percent of the federal poverty level will qualify for tax credits to help subsidize the cost of the premiums, and families below 250 percent of poverty will qualify for additional “cost sharing” to help them pay deductibles and co-pays. Small businesses will be able to purchase insurance through the exchange, with some eligible for a small business tax credit to help defray the cost of coverage for their employees.
- DC also has the option to establish a Basic Health Program, which would provide a more affordable coverage option for people who fall between 133 percent and 200 percent of the federal poverty level and are not eligible for Medicaid. Such an option is currently under consideration by city leadership.
While some states dragged their feet on implementing the Affordable Care Act, hoping that the Supreme Court would invalidate health reform entirely, the District has been moving ahead. DC passed reforms to the private insurance market and enacted a law to set up its exchange in 2012. The DC Council approved the Mayor’s nominees for the Exchange’s governing board last week, and the District has invested in a major new computer system that will allow residents a streamlined and seamless experience in applying for insurance coverage and other benefits in DC. This will help keep DC healthy—physically and fiscally.