The Coming Medicaid Purge
A 2017 rally for health care reform in Salt Lake City. (AP Photo/Rick Bowmer, File)
Millions will lose federal health coverage when the pandemic officially ends — and contractors are poised to cash in.
by LIBBY WATSON
[Ed.: NYPAN is a strong supporter of passing the New York Health Act]
Since the start of the pandemic, Medicaid, the federal and state program to provide health insurance to low income Americans, has been far more generous than in the past. Enrollment is higher than ever, at 77.8 million.
This isn’t because of some nationwide change of heart in state governments; it’s because states were paid to stop cutting people from their Medicaid rolls. Under the Families First Coronavirus Response Act, the first coronavirus relief bill passed in March 2020, states received a 6.2 percent boost in federal Medicaid funding in exchange for halting disenrollments.
The usual process of conducting “redeterminations,” in which states redetermine whether a beneficiary’s income levels or other factors still qualify them for Medicaid, has been paused for almost two years. States can still conduct these checks, but they can’t cut off anyone’s Medicaid until the end of the public health emergency (PHE) the federal government declared at the beginning of the COVID-19 pandemic.
But when the PHE finally expires, states will once again be allowed to remove people from Medicaid rolls. State governments will even be incentivized to do so, because the additional federal money to pay for all those extra enrollees will expire just 60 days after the PHE ends.
Adding to this pressure is a right-wing campaign pushing to end the PHE and calling on states to start disenrolling people immediately, even before the PHE ends. Republicans in the Senate passed a resolution to end the PHE last week, with Sen. Roger Marshall (R-Kan.) saying the powers it granted the government “are no longer necessary.”
The PHE is likely to continue until July or later, but could end as soon as April. That means that even though the Centers for Medicare and Medicaid Services (CMS) has given states up to 14 months to resume redeterminations, states are likely already preparing to slash their Medicaid rolls enough to offset the coming loss of federal funding.
The potential scale of this mass disenrollment could be huge: The Urban Institute estimated in September that up to 15 million people could lose their Medicaid coverage when the PHE ends. The Georgetown Center for Children and Families estimated in a report released in February that 6.7 million children are likely to lose coverage. Many of the new enrollees over the past few years will genuinely no longer be eligible — not a surprise, since the income limits for Medicaid are very low — but many others who are eligible will lose coverage anyway.
Bad Incentives
In the United States, most public programs ostensibly designed to help people are difficult to access. Onerous means testing requirements, limited availability, or just plain underfunding all limit access to the social safety net. Of every 100 families with children in poverty, for example, just 21 are on the federal cash welfare program.
Medicaid is no different. In 2020, a quarter of uninsured people, or roughly 7 million people, were eligible for Medicaid but remained uninsured. Why would anyone choose to be uninsured in a country where a medical emergency can bankrupt you, if they could get Medicaid? They don’t: They lose insurance when their income increases, or due to administrative barriers. Simply missing a piece of mail can lead to losing coverage very quickly.
Under non-pandemic circumstances, it’s extremely common for eligible people to lose Medicaid because of administrative hurdles. If the state needs more documentation from a beneficiary, the state only needs to provide a minimum of 10 days to respond to a letter. If they don’t provide the right document in this short time — often less than the amount of time it takes for a letter to even arrive — their Medicaid can be cut off. States can take steps to conduct eligibility checks using their own data, such as quarterly wage reports, but automatic renewals that involve no input from beneficiaries make up a small minority of all renewals; some states will ask people with no income to prove they have no income.
Usually, these redeterminations happen on a rolling basis, depending on the date a beneficiary signed up. Now, states are going to have to determine the eligibility of everyone on their rolls at once. (States must conduct redeterminations after the end of the PHE before disenrolling any beneficiaries, according to CMS guidance.)
States will have a huge administrative task on their hands combing through their Medicaid rolls to find potentially ineligible people. Some states have already begun seeking extra help from private contractors, who stand to make millions from this process. Those contractors will provide call center support, or help states identify potentially ineligible people — all for the goal of reducing the number of people who have health insurance.
A number of circumstances are creating an ideal environment for a contracting bonanza. At the most basic level, there is simply a lack of staff to perform all of these redeterminations, due to chronic underfunding and understaffing of state Medicaid departments.
At a January meeting of the Medicaid and CHIP Payment and Access Commission (MACPAC), a federal commission that reviews state policies and provides recommendations to Congress, the panel heard from a Texas-based Medicaid advocate that Republican Gov. Greg Abbott’s five percent across-the-board budget cut has put “an extreme strain” on the eligibility workforce. In Florida, the governor’s budget for next year included only one extra staff member for the Department of Children and Families, according to Florida Politics — a 0.01 percent increase in staff. In Missouri, as of last month, there were more pending Medicaid applications than current enrollees, and the wait time for approval was 70 days — almost a month longer than the federal maximum of 45 days.
Even in less aggressively underfunded states, the length of the pandemic and staff turnover, especially in the current tight job market, mean that many eligibility workers are simply too new to know what they’re doing. Jeff Nelson, who leads the Utah Department of Health’s Bureau of Eligibility Policy, told MACPAC that he estimates a fifth of their total workforce has never done a redetermination.
There’s also the funding mismatch. Once the PHE expires, states will only have extra funding through the end of that quarter — which means July if emergency declaration expires in April, or September if it’s extended until July, and so on. States can’t start disenrolling people until the first of the next month after the PHE expires.
This gives states just 60 days to disenroll ineligible people before they start having to pay for those enrollees themselves. (The Biden administration has said it will give states 60 days’ notice before they end the PHE; Medicaid directors and other advocates recently asked for Congress to increase that number to 90 days.)
Nelson told MACPAC that this short period of extra funding “does put additional pressure on a state like mine to say, ‘So can you do it in six months? How about three?’” Many states have surpluses, thanks to the booming economy and federal aid, but both Republican and Democratic-controlled legislatures seem more likely to direct that money towards tax cuts than keeping people on Medicaid. The American Prospect recently reported that there is “a historically high number of proposals” to cut taxes across the country.
Nationwide failures to boost Medicaid funding would be wonderful news to the Foundation for Government Accountability (FGA), a conservative dark money group pushing to slash the Medicaid rolls.
FGA is best known for paying for government officials across the country to attend a conference in Disney World, where they encouraged the officials to restrict access to programs like food stamps with work requirements. The organization and its sister group, FGA Action, have received at least $3 million in recent years from the conservative dark money network led by Donald Trump’s judicial adviser, Leonard Leo.
FGA senior fellow Scott Centorino wrote last month for the Washington Examiner that the continuous Medicaid coverage requirement was a “crisis” and a “scandal,” arguing that the generosity of keeping everyone on Medicaid is causing the supposed “worker shortage.” Two other employees of the organization wrote a similar piece for the New York Post.
A recent FGA paper makes the case — using incorrect statistics and estimates — that states should simply opt out of the extra funding and begin disenrolling people immediately. They claim that 90 percent of current Medicaid enrollees are ineligible, providing no source other than “authors’ calculations.”
The actual number is closer to 10-15 percent, according to Tricia Brooks, a Research Professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.
On a February 17 press call discussing the release of their report on the potential for loss of coverage among children, Brooks said that while renewals conducted without input from beneficiaries “are a good thing when you are using current data sources that are reliable,” states must be “mindful of the kinds of [data] discrepancies that don’t necessarily impact eligibility.” If the state has more nefarious aims, these data searches can be used “intentionally as a way to reduce their enrollment numbers.”
If you’re a state Medicaid director, the experience of states like Missouri, where mismatched data led to erroneous disenrollment, could be either a warning or a roadmap — depending on your ideology.
In some states, there won’t be an opportunity for the legislature to increase funding or find other ways to address the coming wave of redeterminations before it happens, because many legislatures aren’t in session most of the time. In Oregon, lawmakers are frantically trying to pass a bill that would ease the transition, or provide a “bridge” of coverage for enrollees who no longer qualify, before their legislative session ends on May 27. The state has also applied for a federal waiver that would allow them to determine eligibility only once every two years, instead of annually, as currently required by law.
The state’s Medicaid director told MACPAC in January that he wasn’t optimistic that the legislature would act in time: “I have one bite at the apple to get any budget issues resolved, any policy changes resolved, and I don’t think we are going to be able to because things are too fluid.”
That fluidity is cutting into an already tight window for making the necessary changes to the program. “Even just reprogramming the computer system to do its renewals” can be a challenge, Brooks said in an interview last month. It can take four to six weeks to get a change to IT systems in a programming queue, she said, which is already over half of the 60-day window states will have before the extra funding runs out. Every state has its own system to update. A Commonwealth Fund blog post last year argued that states updating their electronic renewal processes to maximize automatic renewals without needing input from beneficiaries is “the most important single step states and CMS can take to avoid coverage losses.”
States know this huge administrative task that will cost millions of dollars is looming, but they don’t know how soon, or how much notice they’ll get. They can’t easily get more money for staff from the legislature, and even if they could, training that staff to conduct redeterminations is time-consuming. And the longer it takes to do all this, the more it costs them.
It’s no wonder, then, that savvy contractors have been able to pitch themselves as the solution to this problem.
Contracting Gold Rush
In the state of Ohio, a $35 million contract with Boston-based consulting firm Public Consulting Group (PCG) will help the state identify people who are potentially ineligible for Medicaid. The company gets more money from the state the more ineligible people it finds; the company can’t kick people off Medicaid themselves, but will provide lists to the state.