There is a lot of misleading information being spread about state Medicaid redeterminations. Below and in a National Review op-ed today, I explain the situation and discuss the importance of states removing ineligible enrollees from Medicaid. Paragon has also published a report, Pandemic Unwinding: How States Should Clean Up Their Medicaid Rolls, on the need for effective and expedited eligibility redeterminations.
Per the Urban Institute, as of April 2023, there were about 18 million ineligible people enrolled in Medicaid. The approximate annual cost of ineligible enrollees: $100 billion or more.
States have so many ineligible enrollees because they have not reviewed eligibility for anyone on the program since early 2020. If states removed ineligible enrollees, they would lose extra COVID money that Washington showered on states.
Starting in April, states began reviewing eligibility—some in a more expedited fashion than others. Since there are likely 18 million ineligible enrollees, we should expect about 18 million people to lose Medicaid as states complete their eligibility reviews over the next year.
According to Urban’s estimates, a majority of them—9.5 million—will gain employer coverage. In fact, roughly half of those people are dually enrolled right now in Medicaid and employer coverage, meaning taxpayers have been paying insurers for Medicaid enrollees who have workplace insurance. Urban expects 3.2 million children to transition from Medicaid to the Children’s Health Insurance Program and about one million people to enroll in a heavily subsidized exchange plan. Of the 18 million, 3.8 million—or about one-in-five of the people who lose Medicaid—will go uninsured. The Congressional Budget Office has made similar projections, estimating somewhat more uninsured.
Several states, such as Arkansas, Florida, and Indiana, are taking meaningful actions to clean up their Medicaid rolls, protecting resources for those who are eligible and taxpayers. They are asking enrollees to verify or update information, such as income and residence, in order to determine their eligibility. Rightfully, states are removing both people who provide information that shows they are no longer eligible as well as people who choose not to respond to the states’ request for information.
Progressive organizations and members of the media are raising alarms over these removals. The general complaint is that people are being caught in “red tape,” and eligible individuals are being removed from the program. Those complaining never mention the enormous scope of the problem, meaning the 18 million ineligible Medicaid enrollees.
In the National Review op-ed, I explain two big reasons why the progressive alarm is so overblown and why states should continue cleaning up their Medicaid rolls as quickly as possible.
The first element is Medicaid retroactive eligibility. If an uninsured person goes to a doctor or hospital and he or she is eligible for Medicaid, they can immediately enroll and the program will pay for those services. Moreover, Medicaid will pay for any of their medical expenses incurred in the prior three months. Most hospitals have units dedicated to helping people enroll in Medicaid, and they are able to presumptively enroll people in the program. Retroactive eligibility and hospitals’ ability to quickly enroll people in Medicaid means people incorrectly removed now can re-enroll and still have up to three months of their past expenses paid by Medicaid if a need arises.
Second, the federal government requires states to make re-enrollment easy. States are required to send enrollees re-enrollment forms with much of the information already filled out, and states are dedicating resources to educating enrollees about this process. Enrollees just need to update their information and send the form back in. Assuming they update their information, return the form, and still meet eligibility requirements, they remain enrolled.
Writing in the RealClearPennsylvania, Gary Alexander, the director of Paragon’s Medicaid and Health Safety Net initiative, pointed out problems specific to Pennsylvania:
In Pennsylvania alone, more than 600,000 recipients are likely ineligible for Medicaid, and many of these ineligible recipients have other forms of insurance.
In short, states like Pennsylvania will spend hundreds of millions on care for noneligible adults, while truly disabled individuals seeking care in a community setting sit on waiting lists.
Ironically, the main beneficiary of the progressive efforts are health insurance companies that have gained lucrative profits from expanded Medicaid and the massive numbers of ineligible enrollees. As I explained in National Review:
Health insurers have been receiving monthly payments from the government for millions of ineligible enrollees, some of whom do not even know they are enrolled in the program. Insurers’ profits soared with Obamacare’s expansion of the program and have further increased with the COVID-related Medicaid boost. Insurers are increasingly relying on government for their revenues. Although they seem like strange bedfellows, progressives and insurers are a modern Baptists and bootleggers story.
Finally, let’s put this in context. Based on Kaiser Family Foundation reporting, only about 500,000 people have been removed from Medicaid thus far—less than 3% of those who are ineligible. States should not be deterred from taking actions to preserve the program only for people who are eligible and for the taxpayers who work hard to ensure a safety-net exists.
