A record number of Americans are enrolled in Medicaid, the joint federal–state program that provides health coverage to low-income people. The Families First Coronavirus Response Act, passed in March 2020, increased the amount of Medicaid costs that the federal government paid (the federal medical assistance percentage, also called FMAP) for states that agreed not to end people’s Medicaid coverage during the federal public health emergency (PHE).
Secretary of Health and Human Services Xavier Becerra extended the PHE on January 16, 2022, pushing its expiration to April 16 of this year. As more people get vaccinated and cases continue to fall, pressure is mounting to end the emergency, after which states can and would begin redetermining eligibility for Medicaid and removing millions of people’s coverage. Members of the House of Representatives sent a letter last month to Secretary Becerra calling for an end to the emergency.
This commentary explains how millions of people will be at risk of losing health coverage after the PHE ends. Afterwards, it explains how congressional action can help these millions of low-income people avoid losing their coverage once the PHE ends, as well as extending coverage to people in the Medicaid coverage gap.
Who’s at Risk of Losing Coverage
If the public health emergency ends in April, millions of Americans would be at risk of losing their Medicaid coverage. Under the Families First Coronavirus Recovery Act, states were able to have the federal government pay an additional 6.2 percentage points of their Medicaid costs. This increase came with strings attached: states could not make their eligibility requirements less generous than they were on January 1, 2020, and they could not remove people who were eligible for coverage from that coverage until the end of the PHE. These rules were put in place to prevent states from receiving additional Medicaid funds while removing people from the program.
As a result of these policies, millions of low-income people are enrolled in Medicaid or CHIP: in September 2021, nearly 78 million people were enrolled in Medicaid. When the PHE ends, however, states will begin the process of redetermining eligibility for these programs. While federal law generally requires states to attempt to redetermine eligibility based on information already available, for many Medicaid enrollees, this information doesn’t exist. And in most states processing these automated renewals, less than half of renewals are completed based on these processes.
When an automatic renewal is not possible, the state would then be required to send a renewal form to request eligibility information from the enrollee. For example, the Kaiser Family Foundation estimated that more than 1 million people in Colorado were enrolled in Medicaid or CHIP in October 2019, and that number has likely only increased during the pandemic. Health officials in the state have said they expect to review more than 500,000 people’s eligibility, around half of enrollees in the program.
The problem is that people often either do not receive the renewal form or do not respond to it. If a person moved during the pandemic, for instance, the state may not have their correct address, resulting in the patient never receiving the form in the first place. Nearly 32 million people moved in 2020, around 660,000 more than did in 2019, according to Harvard University’s Joint Center for Housing Studies. While the same study found that fewer people moved in 2021, these data still indicate the potential for millions of people not receiving their forms.
When the redetermination process starts back up, millions of people could lose Medicaid and CHIP eligibility. Last September, researchers at the Urban Institute estimated that around 15 million people would lose Medicaid coverage if the PHE ended in December 2021, including 5.9 million children. A more recent report by the Georgetown Center for Children and Families found an even higher result, estimating that at least 6.7 million children would lose their Medicaid coverage.
The federal government recently sent a letter to states, directing them to take their time going through the redetermination process and ensure that people are not inappropriately being removed from the program. Daniel Tsai, the director of the Center for Medicaid and CHIP Services (CMCS), directed states to use the entire fourteen-month period that federal regulations allow to evaluate their entire Medicaid enrollee population. In the same letter, he told states that the federal government will be monitoring states’ progress towards this goal, requiring them to submit data every month on their redeterminations, suggesting states process no more than one-ninth of their total renewals in a given month, and threatening corrective action for states that process redeterminations too quickly.
Congress Can Prevent This Tragic Loss of Coverage
Fortunately, Congress can support states in complying with this guidance from CMCS. The policies it can pass to do so will need to account for both states that have worked to support their residents’ access to care and those that have historically undermined that access. While all states will likely benefit from both sets of policies, the impact of each will depend on how a state has supported health coverage expansion in the past.
Many states have worked to support their low-income residents’ access to meaningful health coverage. For example, thirty-nine states and the District of Columbia have expanded Medicaid under the Affordable Care Act (ACA). Similarly, several states have expanded eligibility for the Children’s Health Insurance Program (CHIP), with eligibility limits as high as 400 percent of the federal poverty line in New York. In these states, federal support for state-based outreach efforts could alleviate much of the risk. The estimates of coverage loss by the Urban Institute and Georgetown Center for Children and Families both found that many of the Medicaid enrollees at risk of losing coverage are eligible for other programs, such as CHIP or marketplace premium tax credits.
Federal support to these states could take a variety of forms, but staffing support and outreach funding are the two policies that would most likely help states connect these people with new sources of coverage. Providing funds to states to hire temporary staff to process renewal forms would allow existing staff, who are more likely to have experience connecting people to coverage, to focus on enrollees who did not respond to requests for information. These additional staff could also be used to help fill language gaps in state staff.
Households with at least one Medicaid enrollee are more than twice as likely to report limited English proficiency—that is, speaking English “less than very well”—compared to households with no Medicaid enrollees. Similarly, people of color—especially Latino and Asian people—are significantly more likely to have limited English proficiency as well. Ensuring that state staff can communicate clearly with patients is essential to not only avoiding a loss of coverage after the PHE ends, but also in advancing health equity within our health care system. Uninsured rates already have significant racial disparities, and this can help ensure they do not become even more stark.
Similarly, providing funds to states to perform marketing and outreach activities can help ensure that people understand both the need to find, and the options available for finding, new coverage. This is especially important for families who aren’t already enrolled in marketplace plans, who may find the application process daunting, and who face a sixty-day deadline to enroll either themselves or their child into a plan.
In states that have not expanded coverage access to the same extent, a stronger federal response is necessary to support low-income families’ access to affordable health coverage. Every state that has not expanded Medicaid has a federally facilitated marketplace, according to the Kaiser Family Foundation. This would give the federal government more leeway to do outreach activities if the states decline to do so themselves, potentially helping more people enroll in marketplace coverage.
Another pair of policies that would help reduce the number of people losing coverage were included in the Build Back Better Act that the House of Representatives passed in late 2021. First, extending the premium subsidies found in the American Rescue Plan Act (ARPA) would ensure that people who lose their Medicaid coverage because their incomes increased above 138 percent of the poverty line will continue to have access to affordable coverage. While Build Back Better would only extend these subsidies through 2025, making the changes permanent would ensure that middle-income families would maintain affordable coverage long after the pandemic is over.
In addition to the ARPA subsidies, closing the Medicaid coverage gap would ensure that many low-income families would be able to afford health coverage even if states do not expand Medicaid. More than 2 million low-income, uninsured adults are in the coverage gap, almost exclusively in the South. People in the Medicaid coverage gap are mostly people of color, with around 60 percent being Latino or Black, despite being only around 35 percent of the non-expansion states’ populations. The Build Back Better Act passed by the House would have temporarily closed the gap by providing people with incomes below 138 percent of the poverty line with zero-premium marketplace coverage and very limited cost sharing through 2025.
To be clear, Medicaid expansion under the ACA would be a more sustainable and effective solution. The ARPA, passed in 2021, further incentivized expansion, providing states with an additional 5-percentage-point increase to their FMAPs for the first two years after expanding Medicaid, in addition to the 90 percent FMAP for the expansion population under the ACA. Taking this approach would likely result in a net increase in federal funds to a state, as the expansion population typically only constitutes around 2 percent of a state’s total Medicaid spending. This would also allow the state to tailor the program to the needs of its lower-income population. Medicaid programs are also prohibited from imposing significant premiums, and while Build Back Better’s provisions support minimal copays, patients may still face costly coinsurance. However, only two states have expanded Medicaid since the law was passed, and both states did so via ballot initiative, making federal action to protect low-income people’s coverage necessary.
The Way Forward
Millions of low-income Americans are currently uninsured, and millions more risk losing coverage when the COVID-19 public health emergency ends. Nearly 78 million people—just under one-fourth of the U.S. population—were enrolled in Medicaid as of September 2021. When the COVID-19 public health emergency ends, many of these people are at risk of losing their health coverage as states begin reevaluating eligibility for the program.
Congress can prevent much of this loss of coverage by supporting states that will work to connect people with new sources of coverage and creating programs to fill in the gaps for the states that will not. Extending the ARPA tax credits and permanently closing the Medicaid coverage gap would help tens of millions of low-income Americans avoid losing health coverage on the tail end of a devastating pandemic. Prioritizing these provisions in a new reconciliation bill is an important step to improving health equity in the United States.