The Affordable Care Act is a big law with plenty of ripple effects, but at its heart is a pretty simple premise: Americans who lack health insurance should be able to go online and pick a plan, and if their income falls beneath a certain threshold, then the federal government will cover part of the cost.
That is, unless you live in Alaska, or one of the other states that has opted out of the federal Medicaid expansion. Then, you can actually make too little money to qualify for help.
This is what some are calling the “Medicaid donut hole.” And falling into the donut hole can be a frustrating experience.
One night in early March, Wayne and Sarah Taranoff walked into a room at the University of Alaska, Southeast, for an open enrollment session on the Affordable Care Act. They didn’t come with high hopes.
WT: [We came] basically just to see what the options were. I didn’t think there would be any and there wasn’t.
RW: And why is that?
WT: Because we’re in the bracket that got screwed.
ST: We make too little. And they didn’t expand the Medicaid.
The Taranoffs own a gift shop on Katlian Street, in Sitka. They are self-employed, and haven’t had health insurance in decades. Wayne Taranoff has diabetes. One year, he said, they spent about sixty percent of their income on medical bills. But their store doesn’t bring in much money. If they tried to buy health insurance on their own, it would cost “more than we make,” Wayne said.
“We only make about $8,000 a year,” Sarah said. “The store only makes enough to pay its electricity, and its phone bills.”
Under the Affordable Care Act, anyone who makes up to four times the federal poverty level is eligible for tax credits and subsidies that cover the cost of insurance bought on the new health insurance exchanges. In Alaska, that means an individual who makes more than $14,580 and less than $58,320 is likely eligible for some kind of help.
But people like the Taranoffs, who make less than $14,580 a year, can’t get subsidies. That’s because, when the law was originally written, everyone under the federal poverty limit was supposed to be covered by an expansion of Medicaid.
In 2012, the Supreme Court upheld the Affordable Care Act, in a landmark ruling. But, they ruled, the federal government couldn’t force states to expand Medicaid. In Alaska, Governor Sean Parnell decided to opt out of the expansion.
“I believe a costly Medicaid expansion, especially on top of the broken Obamacare system, is a hot mess,” Parnell said in a press conference announcing the decision, in November 2013.
Under the original concept, states were supposed to expand the pool of people eligible for Medicaid, so that the program covered not just families with children and people with disabilities, but also low-income adults who don’t have kids at home, like the Taranoffs. The federal government would cover the full cost of the expansion for the first three years, and at least 90% of the cost after that.
But Parnell argued that the federal government couldn’t be trusted to keep its end of the bargain.
“The decision comes to this,” he said in November. “Can states trust the federal government to not cut and run on its share of the cost?”
The Taranoffs said they are angry that Alaska has not expanded Medicaid. But they actually find the whole Affordable Care Act disappointing. They would have preferred a single-payer system, like Canada’s. The idea of being forced to buy insurance bothers them.
SW: We’re being forced to pay private insurance companies.
WT: Well, not us. We don’t make enough.
SW: We can’t get anything.
The Taranoffs won’t have to pay a penalty for remaining without insurance. They can file a hardship waiver. They’ll simply remain as they were: uninsured, and shouldering the cost of medical bills themselves.
According to a state-funded study, about 43,000 Alaskans fall into the same category as the Taranoffs. Of those 43,000, about 17,000 are Alaska Native, and qualify for tribal health benefits. The rest, if they want to buy insurance on the exchange, would have to pay full cost.
Meanwhile, at the enrollment event in Sitka, organizers estimated that out of the 25 or so people who came in to get help finding health insurance, seven left empty-handed. They, too, fell through the Medicaid donut hole.