Medicaid redeterminations have moved more than 24 million people off state Medicaid rolls in less than 18 months. While the disenrolled are the most obviously impacted group by this sudden drop, the remaining enrollees and the companies that insure them will also experience the squeeze that comes from a riskier population and a smaller pool of resources.
In 2022, Medicaid covered nearly 92 million Americans1 almost 50% more than the 65 million-plus lives covered by Medicare2 . That number skyrocketed from 70.7 million in February 2020 to 91.8 million in November of 2022, largely as a result of the Families First Coronavirus Response Act (FFCRA). The FFCRA provided additional funding to states that relaxed their Medicaid requirements. After that funding was cut off, Medicaid enrollees have been disenrolled by the millions.
When Congress halted the enrollment provisions from the FFCRA in March 2023, it required state Medicaid organizations to reconsider the qualifications of their recipients, a process known as "Medicaid redetermination." According to analysis by the Kaiser Family Foundation, this process resulted in more than 24 million Medicaid recipients being disenrolled as of July 20243.
The disenrollment process could have harmful consequences. The Medicaid population constitutes some of the most vulnerable Americans: In 2020, children accounted for approximately 38% of beneficiaries, people with disabilities 12% and senior citizens 10%. In 2021, 41% of all births in the United States were covered by Medicaid. Nearly 50% of adult Medicaid recipients were employed, but these low income adults still qualified for the benefit. Thirty percent of adults on Medicaid reported experiencing low or marginal food security, while 50% reported one or more housing problems.
Some states applied for waivers to slow redeterminations and keep more of their low-income population insured. In doing so, some state agencies found that many of their managed Medicaid partners were removing beneficiaries from their rolls for administrative rather than qualitative purposes. Modern Healthcare reported that state agencies found "a clear pattern of procedural disenrollments outnumbering eligibility disenrollments as they carr[ied] out unwinding the pandemic related coverage requirement."4 Reasons for procedural disenrollment included not having an active address or phone number or beneficiaries not fully completing their enrollment forms.
As millions of enrollees get disenrolled, the calculus for Medicaid managed care organizations has changed. It's been reported that Molina Healthcare, one of the country's largest Medicaid MCOs, could lose $2 billion once redeterminations are complete. People who have been disenrolled are also more likely to be younger, healthier and cheaper to insure, while those who remain on Medicaid will probably be more at risk for more expensive medical interventions.
Redeterminations may not be the only disruptor to Medicaid. The political environment could also be changing in ways that impact Medicaid coverage. While the Biden administration has shown a willingness to work with states to expand their Medicaid coverage and ease their enrollment requirements. A Trump administration may not show that same willingness. The previous Trump administration encouraged states to pilot work requirements as it did in its previous administration. Medicaid work requirements were challenged in court and never implemented, but it is more likely that a Republican administration would tighten up qualifications.56
With Medicaid in transition, Medicaid MCOs are under tremendous pressure, especially as expenses rise and margins are razor thin. These organizations will be challenged to optimize their administrative cost structure to direct care to the lowest cost, highest value care possible. It's time for a return to the fundamentals of managing costs.
In the coming year, the highest priorities for Medicaid MCOs should include:
- Medical management: Insurers need to make sure their members go to the right site of care. That means doubling down keeping enrollees out of the emergency room, incentivizing wellness programs and enhancing care management programs.
- Network optimization: Identifying and partnering with efficient providers, then steering care toward those providers, will help ensure Medicaid members have less of a chance to access overly expensive care.
- Expanded outreach: Managed Medicaid plans could learn a lot from their Medicare Advantage cousins. MA plans offered transportation, food and sometimes even housing benefits. Addressing impactful social determinants of health helped provide the ounce of prevention that resulted in the pound of cure.
Medicaid redeterminations doesn't have to be disastrous for the enrollees that remain. Working with providers and developing more efficient plan designs can help MCOs better manage their sick populations and better deliver the care they need at the right place, at the right time, at the best cost-effective solution.
Footnotes
2. Medicare Enrollment Numbers
3. Medicaid Enrollment and Tracker Overview
4. Unwinding Medicaid Disenrollment Errors
Originally published 22 August 2024.
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