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Why Medicaid Enrollment Continues to Grow
Before the COVID-19 pandemic, Medicaid enrollment was stable or falling. But since the pandemic began and brought with it challenging economic conditions and job losses, enrollment in Medicaid has grown sharply. Between 2020 and 2022, millions more Americans have enrolled in Medicaid and the Children's Health Insurance Program (CHIP) through Medicaid.
In this article, we will examine some of the reasons for the substantial spike in Medicaid enrollment as well as expert predictions for the future.
The key reason for Medicaid enrollment growth
When the coronavirus pandemic was still in its infancy, U.S. Congress passed the Families First Coronavirus Response Act (FFCRA). This act authorized an increase in aid from the Federal Government through the federal Medicaid match rate (FMAP) to states that met certain MOE (maintenance of eligibility) requirements.
The goal was to provide fiscal aid to state Medicaid agencies and prevent loss of coverage during the economic downturns associated with the pandemic. The safety net of the federal funds for state budgets was made available retroactively, starting January 1, 2020, and will continue until the Public Health Emergency (PHE) ends.
One of the MOE requirements for states to receive these additional federal funds was that they keep Medicaid enrollees continuously enrolled. This is the key reason for the significant Medicaid expansion during the COVID-19 pandemic.
Growth is bound to occur when people cannot be disenrolled from Medicaid health coverage. The MOE keeps people enrolled in Medicaid regardless of income changes and stops churn, where people temporarily lose coverage, disenroll, and then re-enroll within a short time.
More than $100 billion in aid from the Federal Government
Data reported shows that in three years (from 2020 to 2022), states will receive approximately $100 billion in fiscal relief due to the increased FMAP due to the FFCRA.
Interestingly, the cost to states for the additional health coverage to new enrollees in Medicaid is around $47 billion, so on average, the federal fiscal relief is more than double the cost incurred by states.
This was done on purpose. The enhanced FMAP was designed to provide fiscal relief to states beyond the costs of enrollment growth because states were expecting large declines in revenue during the pandemic.
As a result of the federal fiscal relief, state Medicaid expenses are estimated to be 6% lower, and federal Medicaid spending is expected to be 19% higher during the three-year pandemic period (2020–2022).
Enrollment increases in different groups
The Centers for Medicare and Medicaid Services (CMS) reports that Medicaid and Children’s Health Insurance Program (CHIP) enrollment increased by 22.1% or 15.7 million between February 2020 and January 2022.
However, others like KFF have estimated that the overall increase in Medicaid enrollment between 2019 and the end of 2022 is closer to 25%. This represents an additional 22.2 million enrollees in Medicaid.
Of these 22.2 million additional enrollees, about 3.5 million represent baseline growth that would have occurred regardless of the pandemic. However, 18.7 million new enrollees in the expanded Medicaid are believed to be due to the continuous enrollment requirements.
The total increase (22.2 million) is divided among various groups as follows:
- Child enrollment 42%
- Expansion adults 33%
- Other adults 20%
- Seniors 3%
- People with disabilities 3%
Forecasts for Medicaid expansion in 2023
The end date of the Public Health Emergency will play a key role in the Medicaid growth that states report.
The Biden Administration has promised a 60-day notice period before the Public Health Emergency expires. At present, the PHE has been extended up to mid-July 2022. If the PHE is not extended any further, the continuous enrollment requirement for states will end on August 1, and the enhanced federal match rate (FMAP) will end with the quarter ending September 30, 2022.
How many people could be disenrolled from Medicaid in 2023 remains uncertain. However, experts estimate that if the MOE ends on August 1, 2022, the number of people that disenroll from Medicaid in 2023 could be anywhere from 5% to 13%, representing a total enrollment loss of 5.3 million to 14.2 million people. The largest enrollment losses are predicted among the groups that experienced large increases, i.e., children, Affordable Care Act (ACA) expansion adults, and other adults.
However, not everyone will lose Medicaid services. Current enrollees in most states may still qualify based on income. The public policy in each state on how to disengage from the continuous enrollment requirements and reevaluate eligibility will ultimately determine continued Medicaid coverage.
Based on the available enrollment data, KFF projects continued enrollment growth through September 2022, with total enrollment exceeding 110 million, up by 25% from the approximately 88 million Medicaid enrollees in 2019.
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