Only folks who don’t qualify will lose their Medicaid

Medicaid advocates are demanding the federal government to stop states from removing people from the program after 25 states and the District of Columbia dropped more than 1.5 million enrollees in less than three months.

The activists claim most of these are “procedural disenrollments” due to states’ failure to contact beneficiaries because of outdated contact information or because the enrollee did not complete a renewal due to poor state instructions.

Yet of those who’ve been “disenrolled,” most will lose Medicaid for a simple reason: They’re not eligible for it, and huge numbers are no longer even getting care via Medicaid — even as taxpayers send millions each month to HMOs, etc. to “cover” them.

The disenrollments are coming after the resumption of an eligibility redetermination process after a three-year pandemic pause.

States normally perform periodic redeterminations to account for changes in beneficiaries’ circumstances that could change their eligibility.

People die, move out of state, get a new job that provides health insurance or higher income that exceeds Medicaid thresholds.

Or they have changes in their family circumstances.

The March 2020 Families First Coronavirus Response Act offered states enhanced Medicaid matching funding (a 6.2% increase) in return for ceasing the removal of ineligible enrollees during the public-health emergency — the “continuous enrollment” condition.

Every state took the cash.

Enrollments surged by 23 million people. The increase was not due to increased poverty.

Even as unemployment fell following an early pandemic spike, Medicaid enrollment continued to grow.

Many current enrollees are likely ineligible for Medicaid benefits.

Medicaid’s improper payment rate was already 21%, or $86.5 billion in annual federal misspending before the pandemic and annual redeterminations were suspended.

The problem with ineligible recipients is not merely that some people receive health insurance to which they are not entitled.

About 90% of beneficiaries are enrolled in managed care, mostly in comprehensive managed-care organizations that receive a per-member, per-month payment to provide services.

States are making monthly premium payments for people with duplicate coverage from employer insurance, insurance in another state or enrollment in a non-group plan or for people who are dead.

Insurers are receiving payments for beneficiaries who will never use services.

This fails to preserve resources for legitimate Medicaid beneficiaries or other state priorities.

It also wastes the federal dollars that fund most Medicaid expenditures.

Congress ended the continuous-enrollment requirement as of March 31, 2023, and began to phase out the enhanced federal Medicaid payments to states over the course of 2023.

States have up to 12 months to initiate, and 14 months to complete, a renewal (or disenrollment for those determined to be ineligible) for all Medicaid enrollees.

The Urban Institute estimates nearly 18 million people could be pared from the rolls.

Some states, anxious to end wasteful spending, prepared.

In a recent Paragon Health Institute program, representatives from Arkansas and Iowa described years-long programs to update addresses and other enrollee information and to alert providers and enrollees that eligibility redeterminations were coming.

Both states started redeterminations focused on those likely ineligible and have begun disenrollments.

Other states seem less concerned.

Oregon will not start removing anyone until Oct. 1.

While Florida has already disenrolled 303,000, New York will not start disenrollments until July.

Advocacy groups and the Center for Medicare and Medicaid Services claim most coverage losses are due to states’ failure to contact enrollees or enrollees’ difficulty navigating the renewal process.

These administrative problems are likely minimal.

The Kaiser Family Foundation reported that all states are now updating enrollee contact information and instituting new administrative measures to diminish mistaken Medicaid terminations.

Iowa and Arkansas officials reported that the primary reason people are not responding to renewal inquiries is that they’re already covered by other insurance.

Florida officials have told my Paragon colleagues that most non-responders have not used any Medicaid services in the past year.

Nearly all those no longer eligible for Medicaid will qualify for other coverage through employer plans, subsidized ACA exchange plans or other non-marketplace insurance.

Even those who remain eligible but are mistakenly removed from coverage have little risk of experiencing gaps in care.

Beneficiaries are eligible for three months of retroactive coverage if it is later determined they are eligible.

Hospitals are allowed to assume presumptive eligibility without verifying eligibility information.

Finally, a robust appeals process is in place for renewal denials.

The sky is not falling. In fact, the sky is clearing as wasteful expenditures finally end.

Joel Zinberg is a senior fellow at the Competitive Enterprise Institute and director of the Paragon Health Institute’s Public Health and American Well-Being Initiative.