Marching Toward the Medicaid Cliff

Tradeoffs

July 8, 2021

A congressional ban on removing anyone from Medicaid is likely to expire early next year. What will happen to people who lose their coverage, and how are states preparing for this unprecedented undertaking?

In March 2020, Congress offered states additional Medicaid funding as long as they agreed to keep everyone enrolled in the program for the duration of the federal public health emergency, regardless of their eligibility status. As of January 2021, nearly 10 million had joined Medicaid or the Children’s Health Insurance Program (CHIP) during the pandemic, pushing enrollment to a record high of more than 80 million people. (Some independent analyses put the current total higher, closer to 90 million.)

The Biden administration has indicated the public health emergency will last at least through the end of 2021. Once it expires, states will once again be required to remove ineligible people from their rolls. While no national estimates exist for how many people currently enrolled in Medicaid are technically ineligible, a Tradeoffs survey of state Medicaid offices found that just eight states expect an estimated 1,071,000 of their current beneficiaries are ineligible and would lose coverage once the health emergency ends (see table below).

This suggests that nationwide, millions are likely to lose their coverage, which is in line with expert expectations that much of Medicaid’s growth during the pandemic is a result of the continuous enrollment requirements.

How Are States Preparing?

While states are not allowed to remove people from their Medicaid rolls during the pandemic, guidance from the Centers for Medicare and Medicaid Services (CMS) in December 2020 encouraged states to continue checking and updating beneficiaries’ eligibility status, a process known as redetermination.

Once the public health emergency ends, that same guidance allows states to rely on redeterminations completed up to 6 months earlier to remove someone from Medicaid (although CMS says it expects to release updated guidance soon and may to revise this point). Some advocates argue that given volatility in many low-income people’s lives, particularly during the pandemic, this could lead to out-of-date and inaccurate data being used to take away coverage. To this end, some states plan to either rerun all redeterminations or simply refrain from running redeterminations until after the public health emergency expires. A March 2021 Kaiser Family Foundation survey found that 41 states were doing automatic renewals, and 28 were sending requests for documentation.

State Medicaid directors will need to balance competing interests as the end of the public health emergency approaches: the need to quickly remove ineligible people from the rolls and the a desire provide a smooth transition for people who have relied on Medicaid throughout the pandemic. Medicaid directors and advocates are concerned that the unprecedented number of redeterminations in a short period of time could overwhelm Medicaid offices and possibly lead to rushed or inaccurate redeterminations.

Medicaid programs are looking to the Biden administration for clarity on when exactly the public health emergency will end, and the National Association of State Medicaid Directors has asked Congress to extend the enhanced funding states have been receiving for a full year beyond the end of the public health emergency in order to provide additional resources as states return to normal eligibility standards.

What Happens Next?

Most people will lose their Medicaid coverage because they’ve found a new or taken on more hours at an existing one, putting them above income eligibility requirements. Several states say they plan to dedicate additional resources to connecting people who have lost Medicaid to other coverage options.

In the 38 states (and Washington D.C.) that have expanded Medicaid to cover anyone making up to 138% of the federal poverty level, those whose new jobs did not come with health insurance will likely qualify for subsidized coverage through the Affordable Care Act.

The Biden administration has increased funding for marketplace navigators and recently proposed new regulations that would allow for a monthly special enrollment period for people with incomes below 150% of the federal poverty level, specifically mentioning the large numbers of people expected to be moving from Medicaid to the exchanges.

Accessing subsidized marketplace coverage will be more difficult for people living in the 12 non-expansion states, and they may be more likely to become uninsured. Some states say they intend to work with municipalities and community organizations to connect the newly uninsured with care options, such as community health centers.

Tradeoffs is a new podcast exploring our confusing, costly, and often counterintuitive health care system. We go beyond the problems, delving into the pros, cons, and consequences of potential solutions. Our mission is to help people on Main Street, Wall Street, and Capitol Hill have smarter, more honest health policy conversations.