The problem with Medicaid ‘unwinding’

Adrianna McIntyre

July 12, 2023 – As of late June, more than 1.5 million enrollees in Medicaid—the program that provides health insurance to low-income Americans—have been disenrolled from the program, due to a change in federal policy that went into effect April 1. Adrianna McIntyre, assistant professor of health policy and politics at Harvard T.H. Chan School of Public Health, explains why this “unwinding” is happening, which groups are most at risk of losing coverage, and possible solutions.

Q: Why is Medicaid unwinding happening now?

A: At the start of the COVID-19 pandemic, Congress created a policy that allowed states to receive extra federal money for their Medicaid programs. But a condition of receiving that funding is that they couldn’t kick anybody out of the program for the duration of the federal public health emergency. So, for about three years, nobody exited the Medicaid program unless they raised their hand and said, “I don’t want to have Medicaid anymore.”

In late 2022, Congress passed legislation that ended this continuous coverage provision and, starting in April of this year, states have started redetermining people’s eligibility—which is normally a process that happens annually—and removing people from the program if they’re no longer eligible.

Q: What’s your take on how the Medicaid unwinding process has gone over the past three months?

A: It’s bad. We expected it to be bad. It was estimated that 15 million people will lose Medicaid coverage as a result of this unwinding. Some of those people could already have other sources of coverage, maybe through an employer, maybe through a spouse’s employer, or maybe they’ve aged into Medicare. But a lot of states are seeing high rates of what we call procedural terminations. That’s where the state does not have enough information to determine whether or not a person is still eligible for the program and disenrolls them, even though that person might actually still qualify. One federal report estimated that almost half of those who will be dropped from Medicaid during unwinding will still be eligible for the program.

Procedural terminations happen when states mail out renewal forms and just never hear back from the enrollee, or the form is returned, but incomplete. That can happen for lots of reasons that have nothing to do with a person’s actual Medicaid eligibility.

For example, the state might mail the renewal packet to the wrong address. If a person moved in the last three years and didn’t update their information with the state, they might never learn that they needed to provide new information to maintain their benefits. For related reasons, we worry about the homeless population, who may not have an address where they can receive a renewal form.

In addition, these forms can be long and complicated to fill out, presenting enormous hassle costs. That might end up screening people out because they are just overwhelmed by the form and never return it, which would result in a procedural termination. These problems will likely be exacerbated for enrollees who don’t speak English as their primary language, especially if they don’t receive a form in their preferred language.

We’re seeing high rates of procedural terminations in a lot of states. Arkansas is one state that’s particularly concerning, because they’re trying to do all of their redeterminations in six months—half the time of most other states. The Center for Medicare and Medicaid Services asked states to take 12-14 months to do it.

There’s been a lot of variation in termination rates across states. This is probably in part about states putting different levels of effort into outreach to keep people enrolled in the program.

But there are also important differences in states’ technological capacity. Some states are really good at automatically renewing people: Their systems can quickly ping different data sources, such as people’s SNAP records, IRS data, and wage or unemployment data, so they can say, ‘We’re pretty sure this person is still eligible for Medicaid, so we’re going to keep them enrolled.’ In the states with the best systems, over three-quarters of renewals happen through this automatic process. But many state systems don’t perform these eligibility assessments well, either because the state doesn’t have access to reliable data or has a hard time moving data across silos. In those cases, the state mails out a form, and can only make a redetermination of the person’s eligibility if the enrollee returns the form.

Q: Which groups are most at risk of being dropped from Medicaid—and is there anything to be done about it?

A: Research has found that Black enrollees, Latino enrollees, kids, and young adults are most at risk of getting inappropriately terminated—meaning terminated despite remaining eligible—during this process.

Some older beneficiaries are also at risk, in part because their paperwork is even more complex. People with Medicaid who are over 65 years old or who qualify on the basis of disability usually have to show that their assets are below a certain limit, in addition to demonstrating very low incomes.

Another group that policymakers and advocates are really concerned about are people who lose Medicaid in states that haven’t expanded the program under the Affordable Care Act, like Florida and South Carolina. These people might really be ineligible for the program under their state’s stricter eligibility rules, but they may not be able to afford anything else. For example, if a woman entered Medicaid because she was pregnant, had her baby, and then, months later, is no longer eligible for the program because the pregnancy was the basis of her eligibility, she may not have another source of coverage if her income is too high for Medicaid in her state, but too low to receive marketplace subsidies.

When people do lose coverage, there’s something called “presumptive eligibility” that offers protection of sorts for those who are still technically Medicaid-eligible. If they show up to receive care at a hospital or doctor’s office, these folks could be deemed “presumptively eligible” for Medicaid on a temporary basis, based on their income or family circumstances, which would kick in the formal re-enrollment process. Unfortunately, there aren’t similar protections for people who need to enroll in private health insurance. In most cases, private coverage isn’t effective until the first day of the month after you sign up.

Stakeholders across the country are trying to step up to minimize coverage losses by helping people maintain their Medicaid or transition to other coverage. Some states have made a point to send community health centers data on when their patients are up for an eligibility redetermination, so those health centers can reach out to patients and say, ‘The state told us that your Medicaid eligibility is up for renewal. You really need to be keeping an eye out for this form, and you need to make sure that your address is correct with the state. Here’s how you can do that.’

I think this sort of work is really important, and it’s going to matter a lot for people staying covered. But I don’t think it’s ever going to completely close the gap.

For the future, it will be important to ensure that states continue to share information about Medicaid renewal and termination rates. Until unwinding, when states were mandated to disclose data, this process was very opaque. Having comprehensive data makes it possible to say more about what specific state policies and systems are important and scalable to keep eligible people enrolled, and to start crafting policies to improve outcomes in the states where people are most at risk of losing benefits.

Karen Feldscher

Learn more

Adrianna McIntyre discusses Medicaid unwinding on a June 29 Tradeoffs podcast: 1.5 Million People Have Lost Medicaid. How Worried Should We Be?