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With health insurance tied to employment for most Americans, the drastic increase in unemployment and underemployment poses a significant risk for millions. Several analyses have hypothesized the potential impact COVID-19 would have on Medicaid enrollment and uninsurance rates. A brief published by the Urban Institute in May predicted that 25-43 million people could lose their employer-sponsored health insurance coverage as a result of the global health crisis, with many of these individuals likely eligible for Medicaid or for subsidies in the marketplace. An updated analysis by Health Management Associates (HMA) predicts that Medicaid enrollment could increase by 5 to 18 million by the end of 2020. As the pandemic persists, disparities in unemployment, underemployment, and health coverage are also becoming increasingly apparent. For example, low-wage workers in industries such as retail and hospitality are at an increased risk for job-loss, which can result in loss of employer-sponsored coverage. However, it is important to note that this population is also more likely to have lacked coverage prior to the pandemic. In 2018, only 45 percent of low-wage workers relied on an employer for health coverage, and one in five low-wage workers lacked health coverage altogether.
In response to growing concerns about the negative health, social, and financial impacts of the COVID-19 crisis, Congress passed the Families First Coronavirus Response Act (FFCRA) which increased protections and support for individuals and afforded states significant policy and practice flexibilities to protect access to Medicaid. Under the FFCRA, states receive a 6.2 percentage point increase in their federal Medicaid matching rate (FMAP) for the duration of the public health emergency if they meet four Maintenance of Effort (MOE) requirements. Most notably, the FFCRA prevents states from disenrolling Medicaid beneficiaries for the duration of the public health emergency unless the individual is no longer a resident of the state or requests voluntary termination.
The FFCRA MOE requirement to suspend disenrollments has had a tremendous impact on Medicaid enrollment by halting virtually all terminations and, by extension, eliminating churn across state Medicaid programs. However, it is important to acknowledge that the protection the FFCRA affords disappears once the federal public health emergency declaration ends, putting a significant number of Medicaid beneficiaries at risk for disenrollment. As such, several states, including Pennsylvania and New York, have continued Medicaid redeterminations despite the requirement to maintain continuous coverage. This approach allows states to reduce any potential backlog after the public health emergency ends and provides beneficiaries with a wider window in which to complete the redetermination process. Alternatively, some states, like Tennessee, have suspended renewal processes to allow more staff time to be allocated to processing the increased volume of new Medicaid and other benefit applications.
The decision of whether to continue Medicaid redeterminations during the public health crisis will likely have a significant impact on Medicaid enrollment and churn when the emergency declaration ends. If Medicaid beneficiaries do not complete their eligibility redetermination during the current pandemic, we could see significant declines in Medicaid enrollment following the end of the declaration as a large portion of the caseload must recertify at the same time, creating backlogs. Many of these individuals will likely still be eligible for Medicaid, which could create additional administrative burden when they begin reapplying for coverage. States with particularly low ex parte renewal rates could be disproportionately affected by the end of the declaration with potentially higher rates of disenrollment.
As more states delay or reverse reopening plans and many lay-offs become permanent, we can anticipate a subsequent increase in Medicaid enrollment. States have the option to pursue several more permanent policies that can streamline enrollment and reduce Medicaid churn, counteracting the loss of these emergency policies. For example, states can reduce or eliminate periodic data checks to assess eligibility and implement 12-month continuous coverage for children in Medicaid and the Children's Health Insurance Program (CHIP). Considering that the effects of this crisis will last for some time, it is crucial that states continue to prioritize coverage continuity to further improve the overall health outcomes of their enrollees and reduce administrative burden.