What’s In Store for Medicaid Enrollees as COVID-19 Subsides?

The official end to the public health emergency is a welcome sight for most, but for Medicaid enrollees, it could signal disruption as the coverage redetermination process is restored. How will states react, what measures can help the vulnerable from slipping through the cracks, and how will commercial payers be impacted? Our experts offer their analysis.

Most can find comfort in the fact that the COVID-19 public health emergency is nearing an end as the virus shifts to endemic status and the risk of a public health threat abates. Unfortunately, this good news can also become bad news for millions of Americans because the official end of the public health emergency, which is slated for mid-April unless the Department of Health and Human Services extends it, could mean the end of health insurance coverage. This is due to the COVID Medicaid continuous coverage requirement—which has boosted federal funding of Medicaid by more than 6 percentage points during the pandemic if states agreed to keep Medicaid coverage levels in place without checking eligibility criteria—will also come to an end.

States have 1 year after the emergency’s expiration to fully resume normal income eligibility requirements. There is reason to expect that some states, particularly those that have not expanded Medicaid under the Affordable Care Act (ACA), might opt to accelerate the process. What is in store for Medicaid and the overall health care system as the curtain closes on the pandemic? We tapped into the wealth of knowledge and experience of several managed care experts for answers and analysis.

Our panel began their analysis by looking at how states are likely to react to both the public health expiration and the possibility of expanding Medicaid.

“This will be a budgetary issue for the states, so it will depend on how each state weathered the pandemic,” said Melissa Andel, principal at Common Health Solution in Washington, DC. Politics will also factor in. “Have the events of the past 2 years shifted the public’s views toward Medicaid expansion enough to support a change? Are there states that only need a few districts to flip in order to gain a majority to pass expansion [expansion] legislation?”

David Marcus, director of employee benefits at the National Railway Labor Conference in Washington, DC, agreed, putting it this way: “There are two forces driving the issue. The first is the financial commitment that states are making through their share of Medicaid match rates. It is essentially the same point that fiscal conservatives made during the initial expansion of Medicaid through the ACA: A relatively small percentage of a large number is nonetheless a large number in the context of state budgets. The second broader issue is lingering resistance to the ACA itself—and, by extension, Medicaid expansion.”

Dollars always matter at the state level, offered Edmund J Pezalla, MD, founder and CEO of Enlightenment Bioconsult in Hartford, CT. “Medicaid accounts for 20% of state budgets, vying for dollars that could be spent on law enforcement, infrastructure, and other state services. With the end of emergency funding and the declared public health emergency, many people will want states to go back to pre-pandemic funding for Medicaid and other services.”

Most initiatives have an end point, explained Hsu Larry Hsu, MD, medical director at the Hawaii Medical Service Association in Honolulu, HI. Extending Medicaid benefits with no questions asked is a case in point. “It was supposed to be for a limited time. Going forward, states will be very reluctant to continue offering Medicaid benefits unchecked. So they will probably check eligibility.”

F Randy Vogenberg, PhD, RPh, principal at the Institute for Integrated Healthcare in Greenville, SC, suggested that the pandemic has changed attitudes in certain states. For starters, most states that have not expanded Medicaid have encountered financial challenges year after year, he said. “Taking on long-term exposure to unchecked growth of health care costs with no guarantees of a federal financial backstop has further emboldened state leaders to take control over their own population health strategies, reflecting the views of their constituents.”  Dr Vogenberg, who is also chief transformation officer for the Employer-Provider Interface Council, added that American Rescue Plan dollars have been viewed in certain states as “a last gasp move by federal leaders to seize control over states.”

If states could prove that Medicaid without eligibility checks improved outcomes or avoided costs, they might continue that approach even after the public health emergency expires, offered Norm Smith, a principal payer market research consultant in Philadelphia, PA. “But do states have the funds and manpower to analyze it that way? I doubt it.

It may come across as insensitive to address this issue from a purely dollars and cents perspective, or with only politics in mind, even though that is the reality when it comes to funding health initiatives. But there are real people involved with legitimate health needs and often little or no way to pay for that care. How can officials strike
the delicate balance between making sure individuals do not fall through the cracks and the need to steer Medicaid realistically postpandemic?

It won’t be easy, suggested Ms Andel. “I don’t think that we will be able to simply flip a switch, go back to February 2020, and declare that only 72 million people should be on Medicaid. Maybe 83 million people is our new normal for Medicaid enrollment, post-COVID-19.” Pointing to a Kaiser Family Foundation analysis showing adults have comprised most of the increase in Medicaid enrollment during the pandemic, Ms Andel posed a number of questions, most notably: “What if a certain number of adults are unable to work due to complications from long-COVID?” Of course, long-COVID did not exist 2 years ago. Now that it does, the states and federal government will have to consider its effects and whether to fund care because of it.

Mr Marcus concurred that the rules may need to change. “The pandemic created more need for health insurance in all categories of eligibility and may linger in some parts of the country once the public health emergency is officially over. For that reason, a more nuanced system of eligibility could [help with] such differences.” He admitted implementation would be challenging.

Dr Vogenberg acknowledged the need to “strike a delicate balance,” but quickly added that the US health system “leaves little room for delicacy.” It’s no secret that individuals have been falling through the cracks for years due to social determinants of health, economics, lack of primary care resources, and the like, he explained. Medicaid itself, he added, suffers from policy confusion, as well as inadequate and inappropriate navigation to the right resources. COVID-19 added to the challenges, crimping the supply of nurses and making it difficult for those who wanted to work to find work.

Mr Smith again suggested crunching the numbers—if that is possible. “If states have truly benefited from the federal programs passed so far under the Biden administration, it is possible to allow the increased number of enrollees to remain in Medicaid. Going forward, careful management by health plans will be essential.”

Meanwhile, Dr Pezalla broke it down methodically, pointing to 2 approaches for Medicaid enrollment going forward. “One would be to drop everyone and declare that they must re-enroll, demonstrating that they meet the Medicaid requirements. This would create very serious gaps in coverage for the majority of Medicaid patients as the systems for assessing eligibility and enrollment are not efficient.

“The second approach is to leave everyone in Medicaid and review eligibility based on a priority system. For example, those in Medicaid before the pandemic are less likely to now be ineligible than those who signed up during the pandemic. This will mean that states will continue to see pandemic costs level out somewhat, while creating fewer crises for enrollees and their families.”

By some estimates, upwards of 15 million American adults and children could lose access to Medicaid once the public health emergency expires and the re-determination process is restored. Other options exist for many of these individuals, including heavily subsidized insurance from the ACA exchange, as well as coverage under the Children’s Health Insurance Program. But how reliable is the bridge to these alternatives?

Education and outreach are key, said Ms Andel.“It’s complicated, and the complexity is compounded when you consider the need for resources such as internet access and health literacy skills.” Dr. Hsu added, “There has to be a process to actively engage those who are most vulnerable, including seniors, the disabled, children, and pregnant women.” Mr Marcus concurred, “It seems to me that some sort of migration tool that requires little or no effort from the member would be ideal. The more complicated the transition gets, the more people will fall through the cracks. It’s easy to imagine a scenario where bad debt and personal bankruptcies would increase in the near future.”

Most agreed that government glut points to a messy road ahead. Besides the usual roadblocks, Mr Marcus noted that providers could be impacted due to an increase in collection efforts and bad debt. Mr Smith explained that “The federal government is task-saturated, with more critical issues than states are capable of handling.” Dr Vogenberg believes that the end of the public health emergency will lay bare “the need for a major reset in US health care. “We’ve been left to quick fixes, un-wholistic solutions, band-aid programs, and political corruption that has created a kaleidoscopic mess delivering increasing amounts of fiscal waste.”

Dr Pezalla brought it back to the issue at hand and projected some optimism. Noting that up one-third who may lose Medicaid coverage are eligible for ACA subsidies, he pointed out that enrollment on the ACA exchange is now more efficient (initial signup glitches notwithstanding) than enrolling in Medicaid. “Commercial payers operate many of these plans, the influx of new members can be handled by their systems, and the actuarial work has already been done. In some cases, the patients moved from Medicaid may have higher costs than the average exchange member but this is likely to be offset by an overall influx of less ill patients.” Dr Pezalla’s optimism waned a bit as he acknowledged that “some Medicaid enrollees will not be so lucky and will be caught in state level inefficient systems.”

In the midst of well-intentioned efforts to minimize the impact on the vulnerable, Dr Vogenberg warned that simple rubber-stamping could be problematic. “In the rush to reset eligibility, redeterminations might become a cursory exercise. That is not the right solution for those who do not meet the administrative requirements for Medicaid coverage.” He acknowledged the new normal created by COVID. “Some individuals became vulnerable during emergency orders. Furthermore, the lack of interest or need to work shifted priorities around seeking insurance coverage. Returning to normal has become more complicated as a result.”

As for what lies ahead for commercial payers as a result of the potential shift, most of our experts see opportunity but also some uncertainty. Commercial insurers will likely see their membership rolls go up, and they will gain increased leverage with providers, said Mr Marcus. But the gains will be minimal and there will likely be increased enrollment churn and a more at-risk population to cover. Dr Hsu and Mr Smith concurred that more risk might need to be assumed.

Dr Pezalla added, “Commercial payers who operate exchange plans will see more members. This is likely to be an upside as the plans are profitable in most cases. The downside of increased per capita medical spending may occur in states with a higher illness burden. I anticipate that this will be a heterogenous phenomenon limited to the remainder of this year. Thereafter, premiums for the exchange plans will be recalculated and put the plans back into the black.”

Ms Andel said that there is mostly upside for commercial insurers. “There is an opportunity to gain customers, especially if Congress makes the expanded ACA subsidies permanent, which I do think is a real possibility. Studies show that once an individual enrolls in a plan they generally stay in that plan and don’t shop around, so for a commercial plan, it is beneficial to be the plan that people pick first.”

What about the impact on overall health spending if there is a shift away from federal-state cost sharing (Medicaid) to federal-only ACA subsidies? “States will of course prefer that the federal government pay the cost and therefore shifting to ACA plans is desirable from the narrow view of the state, explained Dr Pezalla. “From a global perspective, it is probably somewhat more expensive to provide subsides through the ACA exchanges, but members who receive subsidies may actually have somewhat better access to care based on the breadth of provider networks. However, coverage of drugs may be more restricted because ACA plans do not have requirements to cover all drugs but to cover those in the reference plans, which varies by state. On balance the move to exchanges will likely increase overall health spending but the increase may not be significant.”

Dr Hsu agreed that states would encourage a shift away from Medicaid, and Mr Smith noted that “if the federal government wants to supply the funds for members to be enrolled in ACA plans, states will be more than fine with that.” Mr Marcus echoed that overall costs would increase with the shift. “Exchange plans have higher reimbursement rates than Medicaid plans.” He quickly added that regardless, it is always better for individuals to be covered in some way.

Ms Andel explained that the ACA exchange “may be easier to use and more accepted than a Medicaid plan. Individuals may find that they have better access to providers or specialists than they did under Medicaid.” She also pointed out that unlike states, the federal government has more flexibility because it can more easily go into debt when a crisis or unexpected expense hits.

Dr Pezalla said it is important to recognize the impact on providers, especially hospitals. “They will see more patients who do not have insurance or who have inadequate coverage. Hospitals, including emergency and outpatient departments, have an incentive to help enroll patients. Supporting them in this effort will not solve the problem of lack of insurance for a large number of people but will provide another avenue for checking eligibility and providing a path to enrollment.”

Dr Vogenberg took the opportunity to reinforce that even though the COVID-19 public health emergency is coming to an end, he believes significant problems remain for the health care system in general.

“Both the ACA and Medicaid are not golden tickets for access to high quality outcomes of care.” He characterized the programs as more or less a crapshoot. “For most they could be adequate, but for many they are clearly not. The ramifications of inappropriate care and care gaps results in extraordinary care costs yearly that grow rapidly over time. Such a situation is not good for all parties, including the American taxpayer who subsidizes these programs that deliver mediocre care for most.”

He continued, “Commercial payers or third parties have become more of a problem than a solution. Increased costs across medical and pharmacy benefits remains unabated. New technologies now come into use with significantl costs.” In response, Dr Vogenberg said is beginning to see a shift afoot. “There is a larger cash paying economy emerging in health care, along with pressure on employer plan sponsors to pursue alternative financing and seek purchasing channels that minimize or eliminate traditional payers that do not deliver value.  Case studies abound where millions of dollars have been or are being saved through innovative solutions.”

As the public health emergency ends, these initiatives should be accelerated, urged Dr Vogenberg. “The time for real, effective change in health care policy, financing, and economics is here now.”