Complications with Insurance Coverage in Rural America

Almost 50 million people (16% of the US population) live in rural areas, which have different demographics, health needs, and insurance coverage profiles than metropolitan areas. Thus, both of these populations are affected differently by the Medicaid expansion and marketplace coverage reforms of the Patient Protection and Affordable Care Act (ACA).

Rural areas typically have higher numbers of low-to-moderate income individuals, which is the target population under the ACA’s coverage reforms. Still, two-thirds of the uninsured people in rural areas live in states choosing not to enact the Medicaid expansion. A recent study by the Kaiser Family Foundation examined health coverage in these populations.
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Populations in rural areas tend to have lower incomes than those in metropolitan areas. Approximately one-quarter of the nonelderly rural population has a family income that falls below the federal poverty level (FPL; $19,790 for a family of 3 in 2014), as opposed to the one-fifth of the nonelderly population in metropolitan areas. For example, 25% of nonelderly individuals living in a rural area live 400% below the FPL, while 36% of nonelderly individuals in the metropolitan area live 400% below the FPL.

There are differences in income and coverage access. Only 51% of the rural population had an employer-sponsored coverage plan between 2012 and 2013 compared with 57% of the metropolitan population. Before the implementation of the ACA, the rural population was significantly more likely to be covered by Medicaid (21%) than the metropolitan population (16%).       

The ACA expansion is an attempt to expand healthcare coverage among the rural population, using the expansion of Medicaid for individuals with incomes 138% below the FPL. Providers are also using the availability of premium tax credits for the purchase of private insurance through the health insurance marketplaces for moderate-income families with incomes between 100% and 400% of the FPL.

However, once the Medicaid expansion became optional for states in a Supreme Court ruling in 2012, 24 states decided not to implement the expansion in 2014, and almost two-thirds of uninsured individuals are residing in rural areas that are disproportionately affected by this ruling.

Despite the fact that many individuals with incomes between 100% and 138% of the FPL will be eligible for premium tax credits in the marketplace, many uninsured individuals living below the FPL will be left in a “coverage gap,” in which their incomes are too high for Medicaid eligibility and too low for tax credit eligibility. In rural areas, 65% of uninsured individuals are living in nonexpansion states, while 50% of uninsured individuals living in a nonexpansion state reside in a metropolitan area.

Fifteen percent, or more than a million individuals, living in rural areas are estimated to fall in the “coverage gap” compared with only 9% in metropolitan areas. An equal numbers of rural and metropolitan uninsured individuals are eligible for Medicaid (30%), and a larger percentage of uninsured individuals in a rural area are eligible for premium tax credits than urban individuals (37% vs 32%, respectively).

This analysis used data from the 2012 and 2013 Current Population Survey Annual Social and Economic Supplement, which supplies socioeconomic and demographic information of the US population. For Medicaid and marketplaces, the analysis calculated household membership and income for premium tax credits for each person individually.