The federal government is the third biggest employer in Rhode Island and employs about 11,581 people in the state. About 7,000 of these people have already been furloughed. The government shutdown will have an impact on Rhode Island, even now that employees are sure they will receive back pay. Given that the ostensible reason for this shutdown is the implementation of certain aspects of the Patient Protection and Affordable Care Act, now is as good a time as any to discuss what Obamacare means for the Ocean State.
According to the American Community Survey, Rhode Island has the highest rate of uninsured residents in New England, at 12.2 percent of the population. Compare that to a rate of 4.4 percent in neighboring Massachusetts, where “Romneycare” has already been implemented. If the Affordable Care Act is as effective as Massachusetts’ health care reform, it could mean that about 90,000 more Rhode Islanders would have health insurance.
As of 2010, 21 percent of Rhode Islanders were enrolled in Medicaid. While this number may seem high, it is in fact on the low end for New England. In Maine and Vermont, 31 percent of citizens were enrolled in Medicaid. The number was 26 percent for Massachusetts. Should the Medicaid expansion provisions of the Affordable Care Act work as intended, starting January 2014, more than 51,000 people could be eligible for the Medicaid expansion in Rhode Island. For the first time, 45,000 childless adults who are not disabled would be eligible for Medicaid, if their earnings were less than 138 percent of the federal poverty level — just under $16,000 per year. About 6,700 parents with dependent children who earn between 138 percent and 175 percent of the federal poverty level would also become eligible.
So, should all go according to plan, about 4.9 percent of Rhode Island’s uninsured population would find its way into the Medicaid program. The good news for the state budget is that the Affordable Care Act requires the federal government to pay for 100 percent of the Medicaid expansion up to 2016. This amount ramps down somewhat to 90 percent by 2020. But overall, this represents a total 10-year expense to the state’s general fund of less than $200 million. Put simply, the Affordable Care Act allows the state to insure 51,000 people at a cost of less than $400 per person per year. That’s a great deal for any governor.
The remaining 7.3 percent of the population of the uninsured will either have to purchase health care from HealthSourceRI, the state’s new health insurance exchange, or face a tax penalty. This is commonly referred to as the individual mandate and goes into effect on January 1st. In contrast, the Obama administration recently delayed the mandate that large employers provide coverage to their employees until 2015.
Despite the federal shutdown, Rhode Island’s exchange went online on October 1st. Gov. Lincoln Chafee ’75 P’14 P’17 appointed Christine Ferguson to run the exchange. Ferguson was one of the architects of Senator John Chafee’s 1993 health care proposal that was put forth as an alternative to the bill proposed by President Clinton and his chief health care policy advisor, Ira Magaziner ’69 P’06 P’07 P’10. Ironically, the Affordable Care Act, which was passed by Democrats along party lines, looks a lot like the bill that Ferguson designed for a Republican senator in 1993.
Now that the health exchange is online, we can get an idea of what insurance will cost under the Affordable Care Act. A basic plan for someone middle-aged making $20,000 per year will cost about $7 per month. With an income of about $35,000 per year, the tax credit has tapered off, and a basic plan costs about $200 per month. The annual tax penalty for being uninsured starts in 2014 at $95 per person or 1 percent of taxable income, whichever is greater. By 2016, that amount ramps up to $695 per person or 2.5 percent of taxable income.
There are about 45,000 Rhode Islanders working in food service and another 45,000 working in sales, retail, and related occupations that have full time wages low enough that most will qualify for subsidized health insurance plans, which cost less than $66 per month. The math on this law works out extremely well for these people, just as the math on the Medicaid expansion works out very well for the state budget.
The Affordable Care Act is great news for the 12.2 percent of Rhode Islanders who are uninsured. Our state has the highest rate of emergency room visits per capita in New England. If expanded insurance coverage cuts down on costs to hospitals and taxpayers for excess emergency visits and the more than $100 million spent annually in charity care and covering bad debt for hospitals, the law will leave Rhode Island in even better shape. The effects of the delayed employer mandate remain to be seen. But for what we know about the parts of the Affordable Care Act that will be implemented through 2014, this law is good for Rhode Island.
Daniel Carrigg GS loves this little state he has made his home. He is pursuing a PhD in political science and can be reached at Daniel_Carrigg@brown.edu.
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