MEDICAID ENROLLMENT FORECASTED TO RETURN TO 71 MILLION

Medicaid enrollment is being significantly affected because of the expiration of the continuous enrollment condition authorized by the FFCRA. Since April, millions of people have been disenrolled from the program. Simultaneously, millions of others have either re-enrolled or enrolled in the program for the very first time. 

State data shows that roughly 9.5 million people have been removed from Medicaid since enrollment peaked last April. This trend suggests that Medicaid should go back to its pre-pandemic program size of 71 million members after the unwinding.

Churn in enrollment has long been characteristic of Medicaid. Before the pandemic, an estimated 1 million to 1.5 million people dropped off Medicaid rolls each month.

Many individuals are being disenrolled within a condensed timeframe during the unwinding process. In some states, the situation has proven to be more severe than expected.

The Biden administration at first projected that approximately 15 million individuals would lose coverage during the unwinding phase. However, their estimate was conservative compared to the present data. According to KFF, disenrollments are expected to surpass 17 million, with procedural issues accounting for 70 percent of these instances.

However, roughly two-thirds of the 48 million Medicaid beneficiaries who have undergone eligibility reviews thus far have successfully had their coverage renewed, while about one-third have lost it.

There are, however, significant variations in how enrollment is being affected among states. For instance, Oregon only disenrolled 12 percent of its beneficiaries. KFF reports that 75 percent were successfully renewed, while the remaining cases are still pending. Oklahoma disenrolled 43 percent of its program recipients during the unwinding phase, renewing coverage for only 34 percent. About 24 percent of cases are still pending.

States have varied eligibility requirements, with some implementing policies that make it much easier for members to remain enrolled. For instance, in Oregon, children can remain on Medicaid until the age of 6 without needing to reapply, while all other individuals receive up to two years of coverage regardless of income fluctuations.

Industry experts have expressed ongoing concern about the sharper decrease in Medicaid enrollment among children contrasted to usual trends. This is especially troubling since children usually qualify for Medicaid at higher household income limits than their parents or other adults. According to the latest data from Georgetown University, over 3.9 million children have experienced a loss of Medicaid coverage during the unwinding. 

Utah is the only state to survey those who were disenrolled and found that somewhere around 30 percent were uninsured. Many others obtained employer health coverage or enrolled in subsidized plans through the ACA.

The termination of the continuous enrollment requirement has caused a tremendous impact on Medicaid enrollment. It marks the most significant health coverage transition event since the first open enrollment period of the ACA. Because of varying eligibility requirements across the country, some states are being affected more than others. As they navigate the second half of the unwinding phase, states must make every effort possible to relay enrollment status changes to their program recipients and ensure that their vulnerable populations do not lose coverage. 

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FFCRA AND PHE MEDICAID ELIGIBILITY REDETERMINATIONS

On January 31, 2020, the Department of Health and Human Services declared the Coronavirus a public health emergency. Since then, the Public Health Emergency (PHE) has been renewed nine times, but it is set to expire this August unless it is extended again. Its expiration will have a major impact on Medicaid, when one takes into consideration that millions of beneficiaries will lose the coverage that the PHE and corresponding legislation provided.

Soon after the PHE was declared, Congress passed the Families First Coronavirus Response Act (FFCRA). The legislation served to provide relief during the pandemic by expanding Medicaid to prevent coverage losses for vulnerable populations while simultaneously giving fiscal relief to states. The FFCRA was able to accomplish this by raising the federal medical assistance percentage (FMAP) by 6.2 percent. Additionally, the FFCRA altered the maintenance of eligibility (MOE) requirements by prohibiting states from changing eligibility or removing members from the program, and changed enrollment processes until the end of the pandemic.

Due to the changed Medicaid eligibility criteria, enrollment in the Medicaid program surged during the pandemic. A report by KFF estimated that program enrollment grew by twenty-five percent or 22.2 million enrollees between FY 2019 and FY 2022. Out of those enrolled, MOE enrollment growth represented 18.7 million new enrollees.

With the end of the PHE approaching, states will need to review their Medicaid budgets considering that they will no longer receive the FFCRA's increased funding. Additionally, the MOE requirements will expire, and states will need to begin eligibility redeterminations. As a result, KFF estimates that anywhere between 5.3 million and 14.2 million enrollees could lose coverage.

According to Medicaid.gov, this will be the "single largest health coverage transition event since the first open enrollment period of the Affordable Care Act."

Coordinating benefits to ensure eligible beneficiaries continue receiving coverage during the transition will be critical. CMS has published guidance to assist states with eligibility redeterminations, transitions between coverage programs, and resuming normal eligibility and enrollment operations. According to the guidance, states will have 12 to 14 months to perform redeterminations. DHHS will give a 60-day notice on when the PHE will end to help states prepare.

Considering the growth in Medicaid enrollment because of the FFCRA and the upcoming expiration of provisions, it will be interesting to see how many individuals will remain eligible to receive the Medicaid program's vital health care benefits. In some instances, the circumstances for some individuals will have improved, so they will no longer require assistance. Alternatively, some beneficiaries may be eligible for additional benefits. Eligibility redeterminations will certainly be a challenging task for Medicaid plans; however, it will be an opportunity to ensure that the most vulnerable populations are receiving benefits and that program resources are being used responsibly.

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CORONAVIRUS' EFFECT ON STATE BUDGETS AND MEDICAID

The COVID pandemic has had a devastating impact on the country's economy. As of June, the U.S. Bureau of Labor Statistics reported that the national unemployment rate reached 11.1 percent which translates to 17.8 million unemployed people. Many Americans that have lost employer-sponsored health insurance are now looking to Medicaid for healthcare coverage. According to the Georgetown University Health Policy Institute, Medicaid enrollment has increased by 5.8 percent in the last three months. In Florida alone, enrollment has nearly reached 10 percent. Due to the rise in unemployment and Medicaid enrollment and the reduction in revenue, states are experiencing severe budget gaps. As a result, some states have made considerable cuts to their Medicaid programs, the NGA is requesting additional federal funds, and Medicaid programs are likely to focus on cost containment reform to balance their budgets.

STATE BUDGET GAPS AND SPENDING CUTS

By law, states are required to comply with balanced budget requirements that prohibit states from carrying deficits into the upcoming fiscal year. These requirements combined with the increase in Medicaid enrollment are putting tremendous pressure on state budgets. Recently, a few states have made significant spending cuts because of this. In May, Georgia announced a 14 percent decrease in funding to all of its state agencies, Colorado made a $183 million spending cut to its Medicaid program, and Ohio decreased its Medicaid spending by $210 million. Additionally, Arizona and New Mexico have seen surges in Medicaid enrollment that far exceed their predictions. State officials are worried that they will also have to make major cuts if they do not receive further aid from the federal government.

FEDERAL ASSISTANCE INITIATIVES

On March 18th, the Families First Coronavirus Response Act (FFCRA) was put into law in response "to the COVID-19 (i.e., coronavirus disease 2019) outbreak by providing paid sick leave, tax credits, and free COVID-19 testing; expanding food assistance and unemployment benefits; and increasing Medicaid funding." The FFCRA specifically raised the Federal Medical Assistance Percentage (FMAP) to 6.2 percent. All states and territories are eligible for the increased FMAP provided that they abide by the maintenance of effort (MOE) protections and the following requirements:

a. Keep eligibility standards, methodologies, or procedures that are no more restrictive than what the state had in place as of January 1, 2020 (maintenance of effort requirement).

b. Not charge premiums that exceed those that were in place as of January 1, 2020

c. Cover, without impositions of any cost-sharing, testing, services, and treatments-- including vaccines, specialized equipment, and therapies-- related to COVID-19.

d.Not terminate individuals from Medicaid if such individuals were enrolled in the program as of the date of the beginning of the emergency period, or becomes enrolled during the emergency period unless the individual voluntarily terminates eligibility or is no longer a resident of the state (continuous coverage requirement).

However, the FFCRA did not take into account the massive swell in enrollment. To further protect public health and recover economic prosperity, the National Governors Association (NGA) is requesting that the Senate allocates an extra $500 billion to make up for lost revenue. Additionally, the NAG is requesting a temporary increase of FMAP from 6.2 percent to 12 percent. The increased percentage would be retroactive to January 1, 2020, and would remain in effect until the national unemployment rate dropped to below 5 percent.

To date, there have been no additional funds allocated and the FMAP has not been increased. On July 22, the NGA issued an additional statement urging the Senate to authorize their request.

The NGA says, "Governors have already cut budgets and reduced our payrolls by 1.5 million people, but without Senate action, we will need to make steeper cuts and reduce payrolls even more, at precisely the time when these services are needed most ... We need the Senate's strong support now, so we can fight the virus together and make an economic recovery a reality."

MEDICAID CUTS AND DELIVERY SYSTEM REFORM

Besides federal assistance and budget cuts, states normally control costs by reducing Medicaid benefits such as dental coverage or optional Rx benefits. However, in the current public health emergency, these methods are not necessarily feasible because of the MOE protections under the FFCRA. Additionally, slashing Medicaid spending would also decrease needed federal aid. At the moment, the federal government pays for about 60 percent of total Medicaid costs. That being said states will most likely turn their focus to modifying provider reimbursement rates, managed care profit margins, provider taxes, and managed care and delivery system reform to contain costs and balance their budgets.

The Coronavirus public health emergency's effect on the nation's economy and government-funded healthcare programs has states facing substantial budget gaps. Some have made tremendous spending cuts that will certainly impede Medicaid's ability to provide care when it is needed the most. Millions of Americans are relying on Medicaid for healthcare and states must do everything in their power to contain costs before reducing benefits or access to care. Along with federal support from the FFCRA and the NGA's request to increase FMAP, states should focus on further efficiency and cost-saving technology solutions in their Medicaid plans before reducing funding, access to care, and benefits.

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