End of Medicaid’s Continuous Enrollment: What Are the Stakes?

Return Medicaid to the intended beneficiaries.

This blog has written a lot about the Medicaid program in recent weeks. And it’s for a reason. Medicaid (including CHIP) covers more than 92 million Americans; It is the largest payer of mental health services, the single largest payer of maternity care (two out of every five births are financed by Medicaid), and the largest payer for long-term care.

The original intent of the Medicaid program in 1966 was to provide medical coverage for the poor and those who fall on hard times. As recently as 2009, before the ACA eligibility expansion, only about 51 million Americans were on Medicaid, rising to 71 million by 2019 (before the pandemic). When Medicaid was passed into law, the median income (in 2021 dollars) was $50,803. Almost 60 years later, our incomes have risen to $70,704 (see Table A-2; of course, there’s been healthcare inflation, which is another subject altogether). So why do we have a quarter of Americans receiving medical care/insurance? Of course, Medicaid provides more than just medical care to beneficiaries.

Given that Medicaid is a state-run, means-tested program, states must continuously review the income and categorical eligibility of beneficiaries. This ensures that the program serves the intended population groups. However, to many who believe in single-payer or single administered health systems, Medicaid and Medicare provide a means to that end – by gradually expanding who is eligible for the program, and finding ways to make eligibility sticky, that is, be difficult to disenroll once enrolled.

Medicaid typically reviews eligibility annually using data from beneficiaries/applicants and/or income data from agencies such as the Social Security Administration. If found to be ineligible, beneficiaries are disenrolled. In response to the just-beginning pandemic, these rules were suspended in March 2020, and because Medicaid is a jointly funded program between the states and the federal government, states received additional funds. Thus, we added more than 20 million Americans to the Medicaid rolls in just three years.

With the public health emergency scheduled to end in May 2023, states have a year to “unwind” their rolls, i.e., remove beneficiaries who are no longer eligible for the program. What does that mean? The process is quite straightforward in most places: currently enrolled beneficiaries may be required to provide additional documentation. Some will no doubt lose coverage, but there are options such as the ACA Marketplace or employer sponsored insurance.

I believe strongly that the Medicaid program should be strengthened and narrowly tailored to those in need. States continue to expand Medicaid to cover more people, provide more benefits or both. The Kaiser Family Foundation (KFF), as usual, does a good job of compiling some of these policies. Salient examples include:

• Twelve months of postpartum coverage.

• Twelve months of continuous eligibility, currently optional but will be mandatory in all states beginning in 2024.

• Oklahoma, South Dakota and North Carolina have recently expanded Medicaid coverage under the ACA rules, bringing down the number of states that have not expanded coverage to only eight.

In reality, the unwinding of Medicaid enrollment will not result in a significant reduction in the number of current beneficiaries. In fact, KFF estimates that the number of Medicaid beneficiaries would reduce by 7 to 14 million (preceded by a peak of about 95 million). I think the drop will be much lower than KFF’s estimates. But even 85 million Medicaid beneficiaries is a high number. This makes me wonder – how is it that a country that has achieved such growth in incomes continues to increase enrollment into programs intended for the poor?