Policyengine Healthcare

PolicyEngine US healthcare domain knowledge

Medicaid, the ACA marketplace (premium tax credit), CHIP, and Medicare are the hardest US programs to analyze correctly, because they are modeled as in-kind health benefits rather than cash. This skill is the domain layer for analysts using the policyengine package; for non-health US programs use policyengine-us, for the shared calculation/reform mechanics use the policyengine skill, and for building new health variables use policyengine-model-development.

Verified against policyengine 4.21.0 / policyengine-us 1.764.6 (2026-07). Re-verify variable names and parameter values before reporting.

The one gotcha that dominates everything: health benefits are excluded from net income

gov.simulation.include_health_benefits_in_net_income defaults to False. ACA PTC, Medicaid, CHIP, and Medicare cost flow through household_health_benefits, which the default household_net_income does not include. So a reform that changes aca_ptc or medicaid produces a $0 change in household_net_income — the single biggest time-sink in health analysis. If you score a PTC or Medicaid reform by net-income change and get zero, this is why.

Measure health impact one of these ways instead:

• household_net_income_including_health_benefits — the same net income with health benefits folded in. Its difference from household_net_income is exactly the household's health-benefit value.
• The program variable directly — aca_ptc (tax_unit), medicaid (person), summed or differenced across baseline and reform.
• Population cost: pe.us.calculate_budgetary_impact. Its total already adds the shared-funding health-program cost (Medicaid / CHIP / Medicare Savings Programs) on top of Δtax − Δbenefits, so it captures the health split automatically — do not hand-roll it from household_net_income. See the policyengine skill for the population flow.

Verified end to end (single adult, $35k, Texas — ACA-eligible, not Medicaid-eligible):

import policyengine as pe

r = pe.us.calculate_household(
    people=[{"age": 45, "employment_income": 35_000}],
    tax_unit={"filing_status": "SINGLE"},
    household={"state_code": "TX"},
    year=2026,
    extra_variables=["aca_ptc", "household_net_income_including_health_benefits"],
)
assert round(r.tax_unit.aca_ptc, 2) == 6_250.38          # a real PTC...
# ...but it is NOT in default net income; the gap is exactly the PTC:
gap = (r.household.household_net_income_including_health_benefits
       - r.household.household_net_income)
assert round(gap, 2) == round(r.tax_unit.aca_ptc, 2)

And the toggle itself:

from policyengine_us import CountryTaxBenefitSystem
p = CountryTaxBenefitSystem().parameters
assert p.gov.simulation.include_health_benefits_in_net_income("2026-01-01") == False

Healthcare variables

Entity and period are load-bearing (verified). Note aca_ptc and slcsp are tax-unit; Medicaid/CHIP eligibility is person; slcsp is monthly.

Medicaid and ACA income tests use medicaid_magi, not raw AGI (aca_magi delegates to it). The programs are mutually exclusive by construction — is_aca_ptc_eligible excludes people who are Medicaid- or CHIP-eligible — so a Medicaid eligibility change cascades into ACA eligibility and can open a coverage gap (below 100% FPL, no Medicaid and no PTC in non-expansion states).

Medicaid category precedence (42 CFR 435.119)

medicaid_category assigns each person the highest-precedence category they qualify for. Federal law requires mandatory groups before optional ones, and the ACA "not otherwise eligible" rule (42 CFR 435.119) makes adult expansion the residual among mandatory groups. The model's current evaluation order (verified in 1.764.6 — it has grown beyond the classic nine categories older notes cite):

1. SSI_RECIPIENT — non-MAGI, automatic in most states
2. INFANT → 3. YOUNG_CHILD → 4. OLDER_CHILD — mandatory MAGI children
3. PREGNANT
4. PARENT / caretaker relative
5. YOUNG_ADULT (optional, 19–20)
6. ADULT — expansion, evaluated last among mandatory per 435.119
7. SENIOR_OR_DISABLED — optional aged/blind/disabled (non-SSI)
8. MEDICALLY_NEEDY → 11. WORKING_DISABLED_BUY_IN → 12. SECTION_1115_MEC_ADULT plus HEALTHIER_MISSISSIPPI_WAIVER (MS-specific)

Because order is precedence, a pregnant adult who also meets the expansion income test is PREGNANT, not ADULT. When a reform removes one pathway, always compare medicaid_category across baseline and reform — some people reassign to another category (true coverage retained) rather than losing coverage.

The _fc / _nfc split

Each Medicaid category's eligibility is split into financial criteria (_fc, income vs the state limit) and non-financial criteria (_nfc, age / pregnancy / immigration): e.g. is_adult_for_medicaid = is_adult_for_medicaid_fc & is_adult_for_medicaid_nfc. This lets you test an income threshold independently of demographic rules, and lets a reform move only one dimension (raise an income limit without touching age ranges). When a reform or test targets eligibility, target the right half.

Reforms: the parameters that flat dicts cannot express

Most ACA/Medicaid parameters take a flat reform dict {path: value} (see the policyengine skill). Two structures do not:

• gov.aca.required_contribution_percentage is list-valued — three parallel arrays (threshold, initial, final) that together define the FPL-bracketed contribution schedule. A single {path: scalar} cannot represent a schedule change, so extending or steepening the contribution curve needs a parameter-array edit (a modify_parameters / variable-override reform on the country package), not a flat dict. See policyengine-model-development for writing one.
• State-specific Medicaid income limits live per-state under gov.hhs.medicaid.eligibility.categories.<category>.income_limit.<STATE>; reform the specific state key, not a national scalar.

"IRA reform" in PolicyEngine shorthand means extending the Inflation Reduction Act's enhanced ACA subsidies — the lowered required-contribution percentages and the removal of the 400%-FPL subsidy cliff — beyond their scheduled sunset. It is a change to required_contribution_percentage and the income-eligibility cap, i.e. the list-valued case above.

slcsp returns $0 for the ineligible

slcsp (the benchmark second-lowest silver premium) returns $0 when the person is not ACA-eligible — the model skips the premium lookup. It is not a $0 premium. If you need the unsubsidized benchmark for someone regardless of eligibility (e.g. "what would they pay without subsidies?"), read the rating-area cost parameters directly rather than slcsp:

from policyengine_us import CountryTaxBenefitSystem
p = CountryTaxBenefitSystem().parameters
p.gov.aca.state_rating_area_cost  # indexed by state and rating area

Geographic variation: age curves and family tiers

ACA premiums vary by rating area, and the age-rating rule is not uniform. Most states use the federal age curve, but the model carries custom age curves for AL, DC, MA, MN, MS, OR, UT and family-tier rating (not age-based) for NY and VT (verified from policyengine_us/parameters/gov/aca/age_curves/: al, dc, ma, mn, ms, or, ut plus ny, vt). When a change touches ACA premiums, check whether the affected state is one of these — a fix that assumes the federal curve will be wrong for them.

Data for state-level health analysis

State-level Medicaid/ACA results need a state-representative sample. There are no per-state data files — do it by filtering the certified national dataset (or the populace_us_2024_acs_local build) by its state_fips / state_code column. The dataset names, ensure_datasets, and scoping strategies are all in the policyengine skill; how the data is built and calibrated is in policyengine-data. National samples can give implausible single-state health mixes, so scope to the state and read the build's release notes before reporting state numbers.