The inadequate Medicaid-to-ACA shift

The outgoing Biden administration recorded the highest ever enrollment in Affordable Care Act plans in 2025 amid rapidly falling Medicaid enrollment.

The Centers for Medicare and Medicaid Services yesterday announced record enrollment in Affordable Care Act private insurance plans for 2025. Don’t break out the champagne.

Medicaid enrollment in the past year has fallen by any even greater amount. Unless employers picked up the slack, it is possible that the uninsured rate will rise in the coming months as states, especially those that are GOP-run, continue to pare low-income workers from their Medicaid rolls.

The end of the COVID emergency reinstated annual renewal reviews for maintaining Medicaid enrollment. Millions of people who gained coverage during the pandemic-driven recession no longer qualify because they returned to work. It doesn’t matter if their employers don’t offer coverage.

The reinstated renewal process also affected millions of working people whose incomes rose above their state’s threshold for obtaining Medicaid coverage. A 2021 Kaiser Family Foundation analysis of federal survey data showed that 61% of non-elderly, non-disabled Medicaid adults worked full or part-time.

In the past two years, nearly 12 million adults have left the Medicaid program. While many states made a determined effort to help people losing Medicaid coverage sign up for ACA exchange plans, that number rose by only 7 million. Ironically, some of the largest gains in ACA coverage came in Texas and Florida, two of 9 states that refuse to expand their Medicaid programs to include people earning up to 138% of poverty wages.

The next big battle over coverage begins in a few months. The Republican-run Congress’ highest priority this year is renewing the 2017 Trump tax cuts, which went mainly to large corporations and the rich. To help pay for the tax cuts, they plan to pare back the subsidies that make Obamacare plans affordable. Medicaid may also be on the chopping block given the GOP’s long-time goal of capping federal spending by turning the program entirely over to the states through block grants.

The U.S. is one of the few countries in the world that tie health insurance coverage to employment. Yet, according to the Bureau of Labor Statistics, just 26% of workers whose earnings place them in the lowest 10% of all wage earners have access to employer-sponsored medical plans compared to 96% of employees in the highest 10% of wage earners. Overall, only 70% of private sector workers had access to medical care benefits in 2022 and less than half of those obtained coverage that way (a take-up rate of just 66%).

Why don’t workers buy into their employer-offered plans? I suspect it is because their wages are so low that they figure it is worth taking the risk of going without coverage rather than pay the premiums their employers charge to participate.

That’s the main reason why it is so important to maintain both Medicaid coverage and the ACA subsidies. They are the safety net for the bottom third of the workforce whose employers don’t provide affordable coverage.