States are mixed on how to address Medicaid uncertainty once the COVID-19 public health emergency expires, according to a panel that advises Congress on the program.
During the PHE, states that received a 6.2 percentage point increase in federal funding for Medicaid were forbidden from disenrolling beneficiaries from the safety-net program. That resulted in enrollment in Medicaid and the Children’s Health Insurance Program swelling by 24%, making the programs the largest single source of coverage in America.
When the PHE ends — something that could come in October at the earliest — states will resume eligibility redeterminations, something that raised concerns of coverage interruptions for some of the most vulnerable populations in the U.S.
Estimates of how many people will become newly disenrolled at the end of the PHE vary, ranging from 5 million to 14 million. Many of these people will be eligible for other sources of coverage, such as subsidized plans in the Affordable Care Act exchanges, but “whether they will be connected to coverage and successfully enrolled remains to be seen,” said Martha Heberlein, a principal analyst for the Medicaid and CHIP Payment and Access Commission, during the group’s meeting Wednesday.
MACPAC staff interviewed Medicaid officials in five U.S. states and found a wide variety of opinions on how difficult the looming process of unwinding, or resuming annual eligibility reviews after the PHE ends, might be.
Not knowing when the PHE will end has hampered the ability to plan for some states, but not all. Some states MACPAC interviewed said they’ve had time to develop an unwinding plan, while several have already enacted broader changes to their Medicaid processes.
“Sometimes knowing a date can light a fire and if you have a deadline you can respond to that deadline ... but that was not consistently voiced,” Heberlein said.
Some states have had to start and stop preparation for unwinding as the end date of the PHE shifts, consuming resources. One state reported continually notifying beneficiaries when there’s no immediate action to take could desensitize them to the situation.
“The repetitive hurry up and wait is wearing on everyone,” Heberlein said.
MACPAC floated decoupling the end date of the PHE from the end date of the continuous coverage or FMAP provisions. Policymakers could give states additional advance notice, or a fixed date when unwinding will begin.
But some states MACPAC interviewed noted that more than 60-days advance notice wouldn’t substantially improve their ability to prepare. Some states thought they didn’t even need a full year to return to normal eligibility and enrollment operations.
It’s unclear what states, if any, will make their unwinding plans available publicly, though several have committed to doing so. That lack of transparency could make it difficult to track changes in beneficiaries’ coverage, commissioners argued.
Commissioner Tricia Brooks, a professor at Georgetown’s public policy school, argued more needs to be done to get real-time data so regulators can take action to prevent coverage losses. In 2018, only 4% of people who lost Medicaid transitioned to the marketplace, and 70% of them had a gap in coverage, Brooks said, citing MACPAC data.
That was before enhanced subsidies in the marketplaces, but “that’s a dismal statistic to look back on,” Brooks said. “We need to think out of the box a little bit in terms of how we get real-time consumer assistance to folks who are losing Medicaid.”
Setting beneficiaries up on a glide path from Medicaid to the marketplaces is easier in states with a state-based exchange, rather than a federal exchange, Heberlein said.
California passed a law in 2019 directing its Medicaid program to automatically enroll people who lose Medicaid coverage in ACA plans, if they’re eligible for subsidized coverage. Oregon is currently looking at enacting a basic health program for people ineligible for Medicaid but with incomes below 200% of the federal poverty line, something that was part of the original ACA but was only adopted in New York and Minnesota.
Another concern is that the demise of the enhanced FMAP might stifle state revenues, which are performing better than was expected earlier in the pandemic. The enhanced FMAP contributed $100.4 billion to states in the 2020 through 2022 fiscal years, Heberlein said.
Under current law and CMS policy, states will be working through the backlog of redeterminations after the enhanced FMAP is no longer available. That might encourage states to unwind more quickly than they might otherwise, said Commissioner Darin Gordon, ex-director of Tennessee’s Medicaid program.
Policymakers could extend the enhanced FMAP or gradually phase it out to streamline that looming financial cliff, Gordon suggested.
”There is a wide range where states are,” Gordon said. “It’s hard to think about uniform policy that would address everyone’s needs.”
But states MACPAC spoke with didn’t say financing was affecting their unwinding plans, Heberlein said. They didn’t think extending the enhanced FMAP was necessary — though they acknowledged that other states may think differently.
Perhaps increasing or continuing the FMAP isn’t “the area of greatest need,” said MACPAC Chair Melanie Bella, policy head at Cityblock Health. “Perhaps we start talking about what a post-redetermination world looks like.”