Publication

The Largest in Health Care Coverage Since the Start of the Affordable Care Act

INTRODUCTION

America’s health insurance system is undergoing a massive disruption in coverage, specifically for adults enrolled in Medicaid and for children enrolled in the Children’s Health Insurance Program (CHIP). On April 1, 2023, four months after the COVID-19 public health emergency declaration ended, states resumed their Medicaid and CHIP redetermination process, which had been suspended during the pandemic. Troubling data is emerging from the states about what is happening to the 93 million Americans — nearly one in four — who gained Medicaid or CHIP coverage during the health care emergency.

Medicaid and CHIP enrollment grew substantially throughout the emergency due to the combination of the pandemic recession, new “continuous coverage” requirements and money from the federal government, and belated decisions in Nebraska, Montana, and Oklahoma to expand Medicaid under the Affordable Care Act (ACA). As a result, an additional 20.2 million Americans gained health care coverage.

Spiking unemployment rates caused millions of Americans to lose their employer-sponsored health insurance along with their jobs. Unemployment peaked at 14.7% in April 2020. By May, an estimated 27 million workers and their dependents had lost their health plans. Not surprisingly, the biggest increases in uninsured people were seen in states that had declined to expand Medicaid under the ACA.

Hit hardest by loss of coverage were mostly men, people aged 27-50, Hispanics, and low-income families. In response, Congress passed the 2020 Families First Coronavirus Response Act (FFCRA), which expanded enrollment in state Medicaid and CHIP programs from 71 to 94 million. In addition, more Americans purchased private health plans in the ACA’s individual insurance Marketplace. As a result, during the emergency the U.S. uninsured rate actually dropped to a historic low of 8.6% in 2021.

Now that the continuous enrollment has ended, an estimated 17.4% of Medicaid and CHIP enrollees (15 million) are projected to lose coverage. Some experts have estimated that disenrollments could range from 8 to 24 million. The Department of Health and Human Services (HHS) predicts that nearly 7 million eligible people could lose coverage for “procedural” reasons. This refers to situations in which states have outdated contact information due to misunderstanding or confusion the enrollee has on the paperwork, or they did not complete the renewal packets within the deadline.

The Congressional Budget Office (CBO) estimates that 6.2 million Americans will lose coverage in the redetermination process and will fully become uninsured, and an estimated 5.3 million children are anticipated to lose their coverage as well. HHS estimates that a third of those who will be at risk for losing Medicaid coverage are Hispanic, and 15% are Black. Unfortunately, the current data coming out of most states does not include a breakout of demographic groups. CBO estimates that this will swell the ranks of the uninsured by over 10% by 2033.

As of November 1, 2023, at least 10,046,000 Medicaid enrollees have been disenrolled based on the data from 50 states and the District of Columbia. Because there are varying lags of when states report data, this is likely an undercount of the actual number of disenrollments. There is also substantial variation in the disenrollment rates among these reporting states as each state has different approaches to managing its redetermination process. “Most concerning among recently reported redetermination data is that 71% of people have been disenrolled due to procedural glitches. Examples include states that have outdated contact information, enrollees confused by the paperwork, or missing deadlines for completing renewal packets. Confusion abounds, as adults and children may or may not still be eligible for Medicaid and CHIP, may have other coverage options, or may remain eligible for Medicaid or CHIP but don’t know it.

Throughout the redetermination process, people will lose Medicaid coverage because their income has increased as the economy has recovered. Disenrollment rates will vary according to differences in how the states approach redetermination. Those who are no longer eligible for Medicaid may be able to find coverage through the ACA Marketplace. They’ll be eligible for premium tax credits if they don’t have employer-sponsored health insurance that is considered affordable, meaning the employee share of premiums doesn’t exceed 9.12% of income in 2023. HHS estimates that nearly 3 million people could get ACA plans, while 5 million people who are disenrolled from Medicaid will gain coverage through their employers. While it will be critically important for those who are deemed ineligible for Medicaid to gain coverage through the exchanges or their employer, copays and out-of-pocket costs may be higher than Medicaid, making those coverage alternatives less affordable for some. Additionally, a KFF analysis shows that very few adults and/or children who lose their Medicaid and CHIP coverage will seamlessly transition to the ACA’s individual insurance exchanges. The most recent coverage transition data shows that roughly two-thirds (65%) of those who were disenrolled from Medicaid in 2018 had a period of uninsurance in the year following disenrollment and only 26% enrolled in another source of coverage for the full year following disenrollment.

Notably, more than half of children in the U.S. receive health care coverage through CHIP or Medicaid. CHIP covers children whose family earns too high of an income to qualify for Medicaid but do not earn enough to afford private health insurance. Unfortunately, parents who are getting notified that they’ve lost their Medicaid coverage don’t always know that their child still qualifies, resulting in further confusion on coverage options. Parents then try to enroll their children in a Marketplace plan that doesn’t always have the correct benefits for children, when they should be receiving coverage through CHIP. Both Medicaid and CHIP benefits are better designed to meet the needs of children, provide more comprehensive benefits, and are more affordable than private plans. There are certain limits on costs for care in CHIP and CHIP has been shown to be a more affordable option than employer-sponsored and Marketplace coverage. It’s clear that moving from Medicaid and CHIP to other forms of coverage demonstrates how important it is for a strong, coordinated response from the federal and state governments to mitigate disenrollments, especially for those who are disenrolled due to procedural reasons.

This significant gain in health coverage for millions of Americans saved countless lives, reduced suffering, and highlighted the importance of sound policies to make coverage more affordable and accessible, while incorporating coverage for telehealth services and for COVID-19 testing and vaccination. This period of continuous coverage is likely the closest the U.S. has gotten to universal coverage, making a smooth transition out of the PHE and mitigating coverage losses throughout the Medicaid redetermination process that much more critical. Despite the loss of the emergency expansion of coverage and the anticipated ineligibility of those who had this access, it is crucial to ensure that those who are deemed ineligible for Medicaid and CHIP are able to find alternative coverage options.

Given the enormity of this challenge and the impact that it will have on millions of Americans, this redetermination process has been deemed the largest transition in health care coverage since the first open enrollment period of the Affordable Care Act (ACA). PPI believes that both state and federal lawmakers should focus on improving data collection and state utilization of available CMS waivers and flexibilities, maximizing coordination with various stakeholders, and continued intervention in states with high procedural termination rates.

This policy brief examines what actions have been taken at the federal level to mitigate coverage loss, the trends of current redetermination data, and policy changes that states and the federal government can embrace to ensure that millions of Americans don’t fully lose their access to health coverage as the country transitions out of continuous coverage.

Read the full report.