Capitol Correspondence - 11.07.23

Medicaid Disenrollments: Navigating a Complex Transition

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Over the past seven months, the American health care landscape has witnessed perhaps the most substantial upheaval in the 58-year history of Medicaid, the government’s health insurance program for low-income and disabled individuals. States have meticulously reviewed the eligibility of more than 28 million individuals, resulting in the termination of coverage for over 10 million beneficiaries. It is likely that many more will face a similar fate in the near future.

This substantial enrollment reduction follows the conclusion of federal safeguards earlier this year, which had, during the three pandemic years, prohibited states from discontinuing Medicaid coverage. Since March 2020, Medicaid enrollment, along with the Children’s Health Insurance Program (CHIP), experienced an extraordinary surge of more than 22 million beneficiaries, reaching a total of 94 million individuals.

Furthermore, across the country, states have disenrolled at least 1.8 million children in the 20 states that provide data categorized by age. Given that children typically qualify more readily than adults, child advocates suspect that many children are being wrongfully terminated based on their parents’ loss of eligibility. Simultaneously, enrollment in CHIP, which has higher income eligibility thresholds than Medicaid, has exhibited only marginal growth.

Children have constituted varying proportions of those disenrolled in each state, with percentages ranging from 68% in Texas to 16% in Massachusetts, as reported by the Kaiser Family Foundation. In July, the Biden administration asserted that most states had been conducting eligibility checks incorrectly, resulting in the inappropriate disenrollment of eligible children and household members. In response, it directed states to reinstate coverage for approximately 500,000 individuals.

The timing and procedures for unwinding Medicaid have varied substantially between states. Some states, such as Idaho, managed to complete the process within six months, leading to the disenrollment of 121,000 individuals out of the 153,000 recipients reviewed as of September. Notably, around 13,600 individuals opted for private coverage through the state’s Affordable Care Act marketplace according to Kaiser Family Foundation (KFF) Health News. However, the fate of the remaining disenrolled individuals remains unknown, as state officials have yet to provide clarity.

In contrast, California initiated the process of terminating recipients only this summer and has been seamlessly transferring eligible individuals from Medicaid to marketplace plans. The rate of Medicaid disenrollment has varied dramatically across states, often aligning with political divides, ranging from a low of 10% in Illinois to a high of 65% in Texas. Notably, about 71% of Medicaid enrollees terminated during the unwinding were impacted by procedural issues, including failures to respond to requests for information to verify their eligibility. The true number of individuals who remain eligible remains unclear per data from the KFF.