“Medicaid needs every dollar it can get. As it is, too many Medicaid enrollees struggle to secure … [+]
State Medicaid programs are in the midst of disenrolling people who are ineligible for benefits. And Democrats think that’s a catastrophe.
Some 3.8 million people have lost Medicaid coverage since April, as states resume standard eligibility reviews that had been paused since the onset of the coronavirus pandemic.
In a letter to America’s governors, Secretary of Health and Human Services Xavier Becerra said he was “particularly concerned that children may lose coverage” during the coming “redetermination.” And in a letter to Centers for Medicare and Medicaid Services Administrator Chiquita Brooks-LaSure, Congressional Democrats say they are “troubled” by the prospect of people being booted from Medicaid “for procedural reasons”—in layman’s terms, problems with their paperwork.
This concern is misplaced. Most of those who will lose Medicaid are not actually eligible for the program. The longer they stay enrolled, the more stress there is on the program—and the more enrollees who are actually entitled to coverage suffer.
Every state runs—and helps fund—its own Medicaid program in conjunction with the federal government. Medicaid pays each state a different amount, called the “federal medical assistance percentage,” or FMAP.
As part of the March 2020 Families First Coronavirus Response Act, the federal government increased its FAMP as long as states kept people continuously enrolled for the duration of the public health emergency, even if they eventually became ineligible. As a result, over 23 million Americans enrolled in Medicaid from February 2020 through March 2023, driving total enrollment in Medicaid and the Children’s Health Insurance Program to nearly 95 million.
But the public health emergency is now over. The federal government began scaling back that extra Medicaid cash in April. At the beginning of next year, the FMAP will return to pre-pandemic levels.
States also gained the ability to “redetermine” whether enrollees were eligible for Medicaid in April. Some states, like Arkansas, have moved quickly. Others, like Oregon, have not started.
Democrats think states are auditing their rolls too quickly. The Biden administration has paused the process in 12 states since April.
This is hardly good news. Thanks to these delays, state and federal taxpayers are spending billions of dollars on coverage for people who are not eligible.
Democrats point out that “procedural reasons” are responsible for three-fourths of disenrollments thus far. That includes bureaucratic snafus, missing paperwork, or the state’s inability to connect with someone to verify eligibility.
But it’s a virtual certainty that many people aren’t bothering to file paperwork because they found coverage elsewhere.
The Urban Institute estimates that 18 million people will exit Medicaid as a result of the redetermination process. More than half—9.5 million—will secure employer-sponsored insurance after disenrolling.
And as research from the Paragon Institute points out, nearly half of this group already had employer-sponsored coverage while enrolled in Medicaid. Private insurers contract to manage health plans for many Medicaid beneficiaries. So taxpayers have been sending significant sums to private insurers to cover Medicaid beneficiaries who had no intent of using that coverage.
Talk about waste.
The Urban Institute estimates that just 1% of those who are disenrolled will not have access to other sources of coverage—whether the Children’s Health Insurance Program, subsidized plans through Obamacare’s exchanges, or other non-group coverage.
There will of course be people booted from Medicaid who should not have been. But it’s important to note that Medicaid retroactively covers three months of medical expenses. So people who lose their coverage in error have recourse.
Each ineligible enrollee who remains in Medicaid strains the cash-strapped program. Total Medicaid improper payments rose from around $36 billion in 2018 to $80 billion in 2022.
If all states had begun redeterminations in April and finished within six months, then taxpayers would have cut the cost of providing coverage to ineligible enrollees by $40 billion, according to the Paragon Institute.
Medicaid needs every dollar it can get. As it is, too many Medicaid enrollees struggle to secure appointments with physicians and often receive subpar care.
By thwarting state efforts to remove ineligible people from their Medicaid rolls, Democrats are making things more difficult for the program’s intended beneficiaries—and exacerbating its long-term fiscal problems.