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Medicaid Agencies Look Toward a “New Normal”

Key factors states are taking into account as they try to accurately anticipate the future of their program

Across the country, Medicaid Directors and their teams have begun the process of redetermining the eligibility of more than 90 million Americans who use Medicaid as their health insurance. Alongside this unprecedented effort, these same agencies are also tasked with the job of anticipating  what their Medicaid programs will look like this time next year, when those who are ineligible have left the program. National sources estimate that the program overall will contract by up to 20 million current enrollees. But who remains covered by the program in each state can look very different with different service, utilization and budget implications.

Here’s a look at some of the key factors states are taking into account as they try to accurately anticipate the future of their program:

  • Programs are paying close attention to not only the overall national unemployment rate (currently at only 3.4 percent) but also state and sector-specific rates, as those vary quite a bit across the country. Medicaid is counter-cyclical meaning Medicaid enrollment tends to rise along with unemployment.
  • Programs are noting that migration on and off the program (“churn”) has historically been high for the Medicaid program and will likely remain so ongoing. This because of fluctuation in income for people served by the program, who tend to work low-wage jobs.
  • Programs are factoring in the relative costs and utilization of the various populations served by Medicaid. For example:
  • Overall, the highest and most costly users of Medicaid services are older adults and people with disabilities, but they typically make up only 10 percent to 15 percent of the overall population of members. Older adults and people with disabilities tend to retain eligibility as their incomes and life circumstances do not change as rapidly as do families and children.
  • On the other end of the spectrum, large numbers of children are served, but for comparatively little cost. Parents and children, as well as working adults, are at higher risk of losing coverage as their household incomes may fluctuate above income limits. In other words, less costly users of services are more likely to “churn.”
  • Put another way, the people most likely to be ineligible for Medicaid are likely to be relatively healthier as compared to their lower income peers, at a somewhat higher income level, and eligible for other coverage through the state-based insurance exchange or the federal marketplace or employer-sponsored coverage.
  • Programs are still assessing the long-term impact of the pandemic on the population in a number of different ways. For example, all the effects of long-COVID and whether or how that condition might impact disability status, other existing chronic conditions is still unclear. Likewise, children’s behavioral health is at a crisis level but whether and how this impacts Medicaid enrollment ongoing has not yet been evaluated.
  • States anticipate that some people who do in fact remain eligible for Medicaid may lose coverage due to lack of awareness or administrative error. Individuals may not realize they have lost Medicaid coverage until they need to use the health care system, which often happens when there is a crisis health event or health deteriorates. For these reasons, some fluctuation in overall census relating to people being reinstated to coverage has to be factored in.

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