15M Americans could lose Medicaid Coverage After the PHE Expires

According to the findings of one study, millions of Americans are at the risk of losing their Medicaid coverage when the Public Health Emergency(PHE) ends. The study by Urban Institute, funded by the Robert Wood Johnson Foundation, was conducted late last year, around September.

Urban Institute estimates that 8.7 million adults and 6 million children could be disenrolled from Medicaid when the Biden-Harris administration ends the PHE. Once the PHE ends, the requirements put in place prohibiting disenrollment of unqualified Medicaid beneficiaries would be wiped off, forcing 15 million people out of the program.

A Brief History of the Medicaid Disenrollment Regulation

In 2020, a federal law (Families First Coronavirus Act) came into effect. The federal law prohibited states from disenrolling any Medicaid beneficiaries as long as the PHE was still in effect.

This regulation ensured residents continued to have medical coverage in the wake of unemployment and an off-the-charts medical crisis. Plus, the Center for Medical Services(CMS) estimated the new regulation would boost Medicaid enrollment by 17 million at the end of PHE. Although Medicaid did not realize the full 17 million upsurge, the regulation increased Medicaid enrollment by 14 million to reach more than 79 million beneficiaries this year.

Prior to the pandemic, states evaluated Medicaid beneficiaries yearly. Individuals earning more than what was eligible for the federal-state-sponsored coverage were disenrolled. In addition, Medicaid also disenrolled beneficiaries living out of state.

Typically, the federal government matched the state’s budget for Medicaid coverage by at least 50%. Some states had higher than a 50% match, but no state experienced a match lower than 50%.

However, when the severity of the Covid crisis hit the nation, the federal government offered more money to the states. The increase was a 6.2% point increase for each state government. In turn, the states were prohibited from disenrolling anyone even if they were earning more than was acceptable to have continued Medicaid coverage.

Now, the federal government plans to bring this agreement to an end when the PHE comes to a close. This means state governments will have to reevaluate Medicaid beneficiaries. The state governments will drop out all beneficiaries earning more income than the amount stipulated by Medicaid to receive coverage. Those who moved from their residential state will also be disenrolled.

According to the study by Urban Institute, those losing coverage could be as many as 15 million.

Initially, states had been offered 6 months to do the re-evaluation, but a CMS guideline extended the process to 12 months. Even then, most state officials think the time given will not be enough. Although states might manage to make evaluations within this time, they will not have enough time to help disenrolled members find new coverage options.

The Dilemma Facing State Governments

Unfortunately, state governments don’t have a precise date when the evaluations need to happen. The PHE has been extended severally but will likely come to a close this summer. Not having a clear date makes it harder for state governments to help residents fully. However, the CMS is asking state governments to be proactive.

For instance, they should be asking residents for their updated addresses, income updates, and other pertinent information to inform the redetermination. Even then, most state officials are unsure whether they can make it all work within 12 months.

State governments are in limbo. They worry starting too early would cost them valuable resources they don’t need, yet they only have one chance to communicate with the beneficiaries at risk. On the other hand, start too late, and they may not have the infrastructure they need to help residents transition to new coverage or re-enroll to the Medicaid program.

State governments believe having an actual date would help a great deal. They would be able to plan for additional staff and reach out to residents for document updates.

It’s even more challenging when you factor in the ongoing labor shortage. Like most employers, state governments are having a hard time attracting and retaining workers. This will be an issue since the states need more staff to help with community outreach and enrollment updates.

If state governments don’t have enough staff, then their call centers will be weighed down. However, the monumental effect will be vulnerable Medicaid beneficiaries losing their coverage because they couldn’t get information on time.

Even though some beneficiaries are eligible, they might lose their coverage. That’s because they won’t have updated their records in time for evaluation.

There’s a Financial Incentive in Play

States may also try to speed up the evaluation process, but not for the benefit of vulnerable groups. Once the PHE comes to a close, the federal government will return to the previous Medicaid matching budget. This means the additional matching funds provided to states by the federal government will cease.

So, states will want to disenroll the ineligible beneficiaries as fast as possible to avoid carrying the financial burden of ineligible beneficiaries. If states rush through the evaluation process, lots of evaluation errors will occur. In turn, millions of people could end up without coverage.

Correcting these mistakes during the re-evaluation of Medicaid beneficiaries will cost more resources, money, and staff.

Most Vulnerable Medicaid Beneficiaries

The disenrollment after PHE will also most likely affect low-income communities of color. According to MACPAC, 61.1% of Medicaid beneficiaries identify as Asian American, Hispanic, and Black.

What are states currently doing to Prepare for the Unwinding?

The lack of an actual date has somewhat tied the hands of how much the states can do. Nonetheless, states have started some proactive activities to reduce the number of vulnerable groups that may lose coverage.

For instance, state governments are underway asking beneficiaries to update their contact information. States must have the updated information to contact enrollees once the re-evaluation process starts.

If states don’t get the updated information, some enrollees may lose coverage despite being eligible. That’s because all enrollees need to update their information every year. When states fail to receive the updated information, such as income reports, the beneficiary is rolled out of the program.

Here are a couple of actions states are taking to ease the redetermination process.

Massachusetts invested $5 million in a redetermination and vaccine campaign. This community-based campaign will help the communities affected most by the Covid pandemic update their information in preparedness for the Medicaid re-evaluation.

Pennsylvania has started a Medicaid data transfer project. This project by the state Medicaid and exchange officials will make it easier for people to register for the Obamacare plan if they are ineligible for Medicaid.

New York’s governor, Kathy Hochul, allocated $69 million of the state budget to the health department. According to the governor, a segment of this budget will cater to the impact the PHE leaves once it ends.

On the other hand, Ohio will rely on a vendor to automate the eligibility evaluation of enrollees during redetermination. In exchange, the contracted vendor will receive a cut of what the state saves with Medicaid redetermination. The vendor only got three months to finish the redetermination, although Medicaid experts believe this timeframe will not be realistic and can result in grievous errors.

What Medicaid Alternatives are thereafter the Unwinding of PHE?

Medicaid beneficiaries may be at risk of losing coverage if:

  • They moved in the last two years and have not updated their current email address and contact information
  • They received the renewal information but did not get to renew their enrollment in time.
  • Their income has increased past the Medicaid eligible bracket.

If you’re in one of these categories, here’s what you can do:

Reapply to Medicaid

If you’re still eligible, you can reapply for enrollment. You can renew your coverage within 90 days after the Medicaid coverage ends without making a new application.

Apply for CHIP (for Children)

If your child is at risk of losing coverage, enrol in CHIP as long as you’re eligible. You can opt to apply directly through the CHIP program or a state agency. If they are not eligible, they may be eligible for Affordable Care Act Market premiums tax credits.

Apply to Marketplace Health Coverage

You can also opt to enrol in marketplace coverage within 60 days after losing your Medicaid coverage. To qualify for the subsidies of pay premiums, your income should be less than $13,000 but 100% above the poverty line.

The PHE is expected to end around Mid July 2022. When it expires unwinding will start, and states will begin disenrolling ineligible members. The federal government will stop the Federal Medical Assistance Percentage(FMAP) buffer, and most ineligible members will lose coverage.

Final Thoughts

State governments can prevent 15 million people from losing their coverage if they start placing infrastructure for redetermination early. On the other hand, Medicaid beneficiaries can protect themselves from disenrollment by updating their contact information immediately.

However, it’s still a challenging process, and there’s no guarantee all members will keep their coverage or find alternatives in time.

MyHST is a wholly-owned Allstate Insurance Company and the National General Insurance Group.