When the Affordable Care Act (ACA), or Obamacare, was initially enacted in 2010, the healthcare reform law was contentious, to say the least. Several groups and even states filed lawsuits contesting parts of the law, or the entire program.
Although the law went through a number of adjustments as the rollout continued, the law held up under lawsuits going all the way up to the Supreme Court and implementation proceeded. Even so, several states have attempted to find ways to opt out.
However, the ACA is a federal law, and no individual state can opt out. Every U.S. citizen is required by law to obtain health coverage that meets mandatory minimum standards or face penalties for failure to comply.
States must do their part to facilitate the availability of affordable healthcare options by setting up state health insurance exchanges. While states cannot legally opt out of the major provisions of the ACA, though, there are certain ways in which they may choose to opt out under Obamacare.
Setting Up State Exchanges
Initially, the federal government offered to help states set up their healthcare exchanges by providing funds for this purpose. Several states took advantage of funding immediately while others followed more slowly.
In the interim, residents of states without their own exchange were allowed to enroll in Obamacare through the federal marketplace. Unfortunately, several states refused to participate in setting up their exchanges at all.
Because every state had to have its own insurance exchange for residents under Obamacare, those that opted not to set them up missed out on federal funding, which is no longer available. To date, there are several states whose exchanges were provided by the federal government and continue to be managed at the federal level.
Under Obamacare, Medicaid was expanded to include low-income individuals and families living with earnings up to 138% of the federal poverty level. This includes, for example, individuals earning up to $15,417 annually or, say, a family of three with a household income of up to $26,347 annually.
While some states wholeheartedly supported this initiative to provide preventive care for the neediest of residents, not only accepting Medicaid expansion and the federal funding offered, but electing to allocate additional state funds to the proposed expansions, other states dropped the ball. They chose to opt out of Medicaid expansion as a means of showing their opposition to the ACA, but they only succeeded in harming their residents in the process.
What Opt-Outs Mean for Residents
Unfortunately, states that have chosen to do all they can to avoid the implementation of Obamacare have done little other than make things harder for low-income residents. At least there was a fallback for states without exchanges – the federal government made sure a system was in place to help all Americans enroll in Obamacare in order to meet mandatory minimums and avoid penalties.
However, states that denied Medicaid expansion funding were left with a Medicaid gap. Some residents that might have been covered by Medicaid under the expansion were left ineligible for both Medicaid and Obamacare rebates. In the meanwhile, these individuals can file for exemption, but they are unable to secure affordable insurance coverage.