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Churning Point: Lessons from Medicaid Pandemic Policies

By Cathy Zhang

During the COVID-19 pandemic, ensuring widespread health coverage took on a new sense of urgency, leading many states to implement policies to address the longstanding problem of Medicaid churn.

Churn is a persistent problem in the U.S. health care system. Changes in health insurance coverage disrupt care and worsen self-reported health at significant rates, even for individuals who go from one insurer to another with no gap in coverage. Legislation enacted as a stopgap measure during the pandemic may present a path forward for securing more durable Medicaid coverage beyond the public health emergency.

The challenge:

Prior to the pandemic, Medicaid churn was an active source of concern among health coverage advocates, particularly as Medicaid enrollment numbers declined during the Trump administration.

The typical Medicaid enrollee is covered for fewer than ten months out of the year. Churn from Medicaid to uninsurance is particularly concerning, as it compounds the negative health outcomes already associated with low income levels.

Further, Black and Latinx communities and individuals, who already experience health and economic disparities caused by structural racism, are overrepresented among the Medicaid population and are at a greater risk of losing coverage due to churn. For states, churning increases administrative burdens and costs for Medicaid programs.

Although Medicaid expansion from the Affordable Care Act reduced churn for expansion states, many of states that did not expand Medicaid were the same states that experienced the most severe enrollment decreases under the Trump administration.

Aside from expanding Medicaid coverage, proposed policies for reducing Medicaid churn include investing in enrollment assistance programs, using data from other public benefits systems to identify eligible individuals, aligning renewal dates among public benefits programs, improving notification systems, and reducing paperwork requirements.

The pandemic catalyzes change:

One of the most widely proposed solutions to address churn — guaranteeing 12 months of continuous eligibility for Medicaid enrollees, regardless of income changes — was broadly realized during the COVID-19 pandemic.

A 2015 study estimated this would reduce annual Medicaid churn by 30 percent. In 2017 CMS estimated that 12-month continuous eligibility Medicaid waivers in New York and Montana would only increase costs by 2-3%.

Providing 12-month continuous coverage has been an option for states since 1997, but in January 2020, fewer than half of the states had adopted 12-month continuous eligibility. Since then, all but six states have adopted 12-month continuous eligibility for Medicaid.

This change is due in part to the impact of the Families First Coronavirus Response Act. The Act offers a 6.2% increase in the Federal Medical Assistance Percentage (FMAP) for certain Medicaid spending during the pandemic to states that met maintenance of eligibility (MOE) requirements. One of these requirements is the provision of continuous enrollment for current enrollees through the end of the public health emergency, which is expected to last at least through the remainder of 2021.

Accordingly, Medicaid enrollment has increased steadily over the course of the pandemic, with a 15.5% increase from February of 2020 to April of 2021. The increase reflects the economic downturn and income loss that resulted from the pandemic, as well as broadened eligibility periods.

Looking ahead:

In August, the Centers for Medicare & Medicaid Services (CMS) issued new guidance for Medicaid transitioning after the end of the public health emergency with two important updates.

The first is extending the timeframe that states have to complete pending post-enrollment verifications, redeterminations based on changes in circumstances, and renewals from 6 months to 12 months. In other words, states will have a year — rather than 6 months — following the end of the public health emergency to determine whether Medicaid enrollees still qualify for benefits and renew their coverage.

The second important update is that states must re-determine if an enrollee is no longer eligible for Medicaid once the public health emergency ends before deeming them ineligible. Thus, a state will not be able to terminate an enrollee’s coverage at the end of the public health emergency just because it had previously collected information indicating that the enrollee would no longer qualify for Medicaid; the state will need to confirm the enrollee’s eligibility status after the public health emergency has ended.

The MOE continuous enrollment is not quite the same as 12-month continuous eligibility, which is tied to the start date of Medicaid enrollment rather than the duration of the public health emergency. However, it produces similar benefits for enrollees, and with the updated CMS guidance, many enrollees may experience upwards of 12 months of continuous coverage.

The adaptations that CMS has made in response to the pandemic may provide long-term strategies to counter Medicaid churn. The new data from the MOE continuous enrollment, and, perhaps more importantly, state Medicaid programs’ new experiences providing continuous enrollment and adopting 12-month continuous eligibility, could be a starting point for enacting permanent requirements for longer eligibility periods.

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