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You’re on A (Medicaid) Roll, Whether You Know It or Not

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Drew Gonshorowski
Senior Research Fellow at Paragon Health Institute

Drew Gonshorowski is a Senior Research Fellow at Paragon Health Institute. He brings a decade of experience conducting quantitative research and building models examining health policy and entitlement programs.

A new Health Affairs piece by Dong Ding, Benjamin Sommers, and Sherry Glied found that 30 percent of Medicaid enrollees in 2022—26.4 million of 88 million enrollees (Ding et al. included the Children’s Health Insurance Program, CHIP, in their total enrollment count so the following analysis includes it as well) — did not know they had Medicaid coverage. By March 2023, Medicaid and CHIP enrollment reached 94 million, likely increasing the number of people unaware they had Medicaid to nearly 30 million. The main reason for the explosion in Medicaid and unaware program enrollees: states did not conduct eligibility reviews for more than three years. This boosted insurers’ bottom lines, but it wasted real resources that could have gone to those who need Medicaid while inflating federal deficits.

In March 2020, Congress increased federal Medicaid payments to states if they stopped eligibility reviews for enrollees during the public health emergency (PHE). All states accepted this deal. The Biden administration then extended the PHE and the continuous coverage policy to April 2023.

Despite fears about the effects of the Medicaid unwinding on coverage, most ineligible Medicaid enrollees already had another source of coverage. The Congressional Budget Office estimated that nearly 22 million people had multiple sources of coverage in 2022, with the most common dual enrollment being Medicaid and an employer plan. Throughout the PHE, as people returned to work and secured an employer plan or other coverage, they remained on Medicaid.

continuous coverage provisions increased munber of people that didn't know they had medicaid

The figure shows the spike in the unemployment rate associated with the pandemic, jumping from 4 percent to 15 percent between February and April of 2020 before declining, contrasted with the steady increase in Medicaid enrollment even as the unemployment rate steadily declined. Typically, several hundred thousand people exit Medicaid each month and several hundred thousand new people enroll. The exits almost entirely stopped during the PHE because states did not assess eligibility, so people who gained other coverage or who earned higher income – changes that would normally make them ineligible – remained enrolled in the program.

The figure also shows the growth of the Medicaid undercount—the difference between the government’s enrollment data and what people report. The most common reason for Medicaid undercount is people misreporting coverage. Historically, the Medicaid undercount is between 15-20 percent of enrollment. Since 2020, continuous coverage provisions accounted for the entire growth in the Medicaid undercount. Coinciding with the decrease in the unemployment rate, the most rapid growth in the Medicaid undercount occurred in the first year of the PHE. In 2022, nearly half of the Medicaid undercount was attributed to the PHE continuous coverage policy.

In April 2023, states began conducting Medicaid eligibility reviews, removing ineligible enrollees and enrollees who did not respond to states’ requests for information. Right on queue, media outlets went on the attack, targeting states’ so-called “procedural” disenrollments. They accused states of “letting people fall through the cracks.” In December 2023, the Biden Administration sent letters to Republican governors of nine states pressuring them to keep ineligible enrollees on Medicaid. Even this week, the Center on Budget and Policy Priorities claimed that “the pandemic-related ‘continuous coverage’ requirement safeguarded this coverage for millions of people.”

These responses ignored the reality that most enrollees removed had other coverage at the time they were removed, or would be eligible for other coverage (in most cases employer coverage), with both the Urban Institute and the CBO projecting a relatively small increase in the uninsured from redeterminations. The bulk of the procedural disenrollments are people choosing not to return forms or provide information, which is sensible for most of them since they already have other coverage, and not people falling through the cracks. The Health Affairs piece confirms this and that they didn’t even know they continued to be enrolled in Medicaid in 2022.

KFF reports that 21.9 million people have been disenrolled from Medicaid since April 2023. Since new people have entered the program and some of the disenrolled have rejoined, net Medicaid enrollment is down only 13.3 million—meaning that overall enrollment is still about 10 million people above pre-pandemic levels.

Of the disenrollments, 69 percent are procedural disenrollments. This should not be alarming considering Ding et al. project that 68 percent of the unwinding population did not know they had Medicaid coverage and two-thirds either already had or would transition to another source of coverage.

Procedural disenrollment doomsaying from media outlets and the Biden administration is misleading and encourages wasteful federal spending—health insurers received billions in monthly payments from the federal government for ineligible Medicaid enrollees. Insurer revenues surged from 2020 to 2022 from the burst of Medicaid enrollment and government payments received on behalf of those enrollees.

Thanks to this new Health Affairs article, we now know that nearly 70 percent of those ineligible enrollees didn’t even realize they had Medicaid. That means the coverage was worthless to them, and money and resources were wasted that could have been used for individuals who actually needed aid. The new data confirms that states that moved aggressively to clean up their rolls were justified in doing so. Moreover, these results show that policymakers should avoid continuous coverage requirements in the future in order to ensure that Medicaid dollars are being spent on people who actually need and use them.

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