Key Facts About the Medicaid Redeterminations You’re Hearing So Much About
Key Facts About the Medicaid Redeterminations You’re Hearing So Much About
Maintaining coverage for millions of ineligible enrollees comes at a steep cost.
COVID-19 and the federal requirement imposed at the start of the pandemic for Medicaid continuous coverage, which prevented states from disenrolling people while the public health emergency lasted, led to an unprecedented surge in Medicaid enrollment — from 64.8 million in March 2020 to 86.7 million in March 2023.
With the crisis over, Congress dropped the continuous coverage requirement in April 2023, giving states the green light to begin conducting eligibility redeterminations and removing those who no longer qualify for the program. Between 15 million and 18 million people are expected to lose their Medicaid coverage over the next year. Just this week, we learned that 500,000 Texans have been dropped over the last three months.
The redetermination process has generated intense media scrutiny, and for good reason. Millions of families will be impacted by changes in coverage, and the public deserves transparency from the government agencies involved.
But the subtext in much of the commentary around redeterminations seems to boil down to this: Throwing people off their health insurance is cruel. Why don’t we just let everyone currently on Medicaid stay on the program indefinitely?
While the sentiment is understandable, a timely, competently run redetermination process is important.
Medicaid is, and always has been, a means-tested program — that seems obvious but merits emphasis. Medicaid eligibility rules are there to distinguish between individuals who we, as a society, have decided are too vulnerable to care for themselves, and those who aren’t. Historically, Medicaid has focused on low-income children and their parents, people with disabilities, and elderly people who need long-term care and have exhausted their savings. Abandoning the redetermination process would upend this basic framework — something that Congress never contemplated and the public has never given its assent to.
Keeping ineligible people on Medicaid would cost federal and state taxpayers about $80 billion per year, according to a new report by the Paragon Health Institute. That’s more than what the federal government spends on the Earned Income Tax Credit, arguably the most successful anti-poverty program in the country. Put another way, if the money spent on ineligible Medicaid enrollees were divided equally between all poor children in America, each would receive more than $7,000 a year.
The majority of those being removed from Medicaid have alternative sources of coverage. The Urban Institute estimates that of the 18 million people projected to lose Medicaid coverage, 3.2 million are children who will transition to the CHIP program, 9.5 million will enroll in an employer-sponsored health plan, and 1 million will purchase coverage on the individual market (often aided by federal subsidies). On net, 3.8 million people are expected to become uninsured. To put that in perspective, nearly 30 million Americans were uninsured in 2019. In 2013, before the main coverage provisions of the ACA took effect, 45 million people were uninsured.
Keeping ineligible people on Medicaid undermines access to care, crowds out the most vulnerable and worsens outcomes for those who are eligible for the program. Medicaid has long struggled with a shortage of participating providers. In many parts of the country, Medicaid patients must wait months — even years — to see a dentist, psychiatrist or other specialist. With more people seeking services, competition for the limited pool of providers grows more intense. The expansion of Medicaid under the ACA — which led about 15 million new adults to join Medicaid, roughly comparable to the number of people expected to lose Medicaid through the redetermination process — has been associated with longer wait times for appointments, greater difficulty in finding a doctor, and slower ambulance response times. In new research, my co-authors and I find that Medicaid expansion also increased depressive symptoms among some previously eligible enrollees, likely due to inadequate provider capacity. In short, shrinking the Medicaid rolls will help the most needy find providers and get appointment slots.
The Biden administration and left-leaning commentators have raised concerns that some Medicaid enrollees who remain eligible for the program may be mistakenly removed due to procedural mishaps — failing to respond to a mailed request for income verification that may have gone to the wrong address, for example. Some people will undoubtedly be the victims of such errors, and states should take steps to minimize the administrative burden of demonstrating eligibility. Moreover, protections exist for those who are improperly disenrolled:
Retroactive eligibility: Medicaid will cover medical expenses incurred up to three months before an individual enrolls, as long as they were eligible for the program when the services were rendered. For example, if an individual is improperly dropped from Medicaid during the redetermination process and later receives care at an emergency room, those expenses will be covered by Medicaid as long as the individual re-enrolls within three months. To be sure, this is an imperfect safety net. Some people who improperly lose their Medicaid coverage may be deterred from even seeking care, thinking — mistakenly — that they can’t afford it.
Hospital Presumptive Eligibility (PE): If there is a medical necessity, the Hospital Presumptive Eligibility pathway allows a disenrolled person to immediately reapply for Medicaid after their coverage is terminated. Under presumptive eligibility, hospitals can make a Medicaid eligibility determination based on a short questionnaire and without verification of income or other criteria. If individuals meet these basic requirements, they are immediately presumed Medicaid eligible and receive coverage until a full eligibility review can be conducted.
The pandemic-era continuous coverage requirement had no historical precedent, and many states have never undertaken comprehensive eligibility redeterminations in such a short period of time. Some vulnerable people will inevitably fall through the cracks. But the alternative — allowing Medicaid to morph into a permanent entitlement for millions of Americans who are capable of paying for their own medical care — is short-sighted, irresponsible, and fraught with unintended consequences.
To go further, please check out the following pieces:
