As Congress begins the process of passing a budget for the upcoming fiscal year, Congressional Republicans have stated they want to cut spending before raising the debt ceiling. While House Speaker Kevin McCarthy has stated that cuts to Medicare, Social Security, and defense spending are all off the table, other social safety net programs like Medicaid are still at risk, and the Republican Study Committee has offered budget proposals that include deep cuts to Medicaid.
This commentary first describes how millions of eligible Medicaid beneficiaries are already at risk of losing their coverage. After this, it highlights how cutting federal Medicaid spending would further increase this risk of inappropriate disenrollments. Finally, it calls on Congress to ensure that Medicaid spending is not used as a political bargaining chip in budget negotiations.
Medicaid “Unwinding” Already Puts Eligible People at Risk
As part of the Families First Coronavirus Response Act, states were offered an increase in the amount of their Medicaid spending that the federal government pays for in exchange for maintaining the eligibility requirements for their Medicaid programs, as well as keeping people enrolled through the end of the public health emergency (PHE). This provision was crucial in keeping people insured during the COVID-19 pandemic, and many states are working to incorporate continuous coverage for some portions of their Medicaid populations.
Having health insurance, including Medicaid, helps improve health outcomes: research consistently shows that Medicaid enrollees fare much better than uninsured patients on a variety of metrics, such as access to care, use of care, and unmet health needs. Medicaid enrollment also significantly reduces the level of medical debt enrollees have and nearly eliminates catastrophic medical expenses—medical expenses exceeding 30 percent of household income.
The prohibition on disenrolling Medicaid beneficiaries during the PHE has led to record levels of enrollment: as of November 2022, more than 91.7 million people were enrolled in Medicaid/CHIP, around a 33 percent increase since the start of the PHE. In December 2022, however, Congress passed the Consolidated Appropriations Act (CAA), an omnibus spending bill that (among other things) decoupled the continuous coverage requirement from the end of the PHE. Rather than ending in May, when the PHE declaration is slated to expire, states are now permitted to disenroll beneficiaries beginning on April 1, 2023.
This “unwinding” process has the potential to disenroll millions of beneficiaries—many of them still eligible, but likely to lose their coverage due to administrative hurdles in maintaining it. For example, beneficiaries may have moved but not updated their contact information with the state, resulting in their renewal forms being sent to the wrong address. The Urban Institute estimated in December 2022 that around 18 million people will lose Medicaid coverage over the course of this unwinding, with nearly 4 million of those remaining uninsured as a result. The Department of Health and Human Services estimated a slightly lower number in August 2022 at around 15 million people.
The potential for massive disenrollments of eligible beneficiaries is especially concerning from a health equity perspective, as eligible children and people of color are disproportionately likely to be disenrolled. Similarly, those disenrolled in states that rejected the Affordable Care Act’s expansion of Medicaid to households that make up to 138 percent of the federal poverty level are more likely to become uninsured by falling into the coverage gap, where they are no longer eligible for Medicaid or marketplace tax credits. Figure 1 compares Medicaid coverage loss due to eligibility loss and inappropriate disenrollment by race and ethnicity, and Figure 2 compares the same by age.
Cutting Medicaid at the Federal Level Would Make Coverage Loss More Likely
Much of the potential for inappropriate disenrollment comes from beneficiaries’ lack of awareness of the need to renew their coverage. A recent survey by the Urban Institute, for example, found that more than 60 percent of adults in Medicaid-enrolled families were unaware of the need to renew their coverage. This trend was true across states regardless of Medicaid expansion status. Combined with the risk of not receiving their renewal forms in the first place mentioned earlier, millions of Medicaid beneficiaries may become uninsured despite still qualifying for the program.
The risk of disenrolling eligible beneficiaries only increases the more quickly a state works to process its redeterminations. The CAA gives states up to twelve months to begin the redetermination process for all of their enrollees and an additional two months to process all of their determinations that begin over this time period, and the federal government has recommended that states process no more than one-ninth of their total Medicaid population in a given month. Some states, however, are working to process this much more quickly; Arkansas recently announced that the state will complete its redetermination process in only six months, for example.
One of the most effective ways that states can work to avoid disenrolling eligible people is by hiring temporary eligibility workers. These workers can serve a variety of functions: contacting current enrollees to ensure they are aware of the need to renew their Medicaid eligibility and flagging enrollees who have moved or were otherwise unable to reach for additional outreach, as well as working with enrollees who have questions as they work through the renewal process. These workers have a higher federal funding percentage than most other Medicaid expenses, making them a smart investment for states and an effective strategy at promoting coverage.
Cutting the amount of federal funding available to states, however, would burden states with the decision of whether to spend as much of those limited funds on medical expenses as possible, rather than promoting eligibility and preventing coverage loss.
Now Is the Time to Bolster Medicaid, Not Cut It
The unwinding of the Medicaid continuous coverage requirement established by the Families First Coronavirus Response Act is a perilous time for enrollees across the country, potentially disenrolling millions of eligible beneficiaries from the program. Children and people of color are especially at risk of losing their coverage inappropriately. Medicaid coverage significantly improves health and economic outcomes, and many of those disenrolled from Medicaid will become uninsured if states do not take steps to prevent this coverage loss.
Non-expansion states in particular face significant risk of major increases in their uninsured populations. If the federal government lowers its spending on Medicaid, states would face additional pressures to speed through the redetermination process and make coverage loss much more likely. To avoid stripping millions of people of the coverage to which they are entitled, Congress must promise that cuts to Medicaid are off limits in the same way that cuts to Medicare and Social Security are.