The End of the Continuous Medicaid Coverage Requirement Will Mean Coverage Losses for People — Especially in Nonexpansion States

On February 1, a handful of states began reassessing eligibility for their Medicaid population (a process known as “redetermination”) as a first step in ending the continuous coverage requirements of the Families First Coronavirus Relief Act (FFCRA). During the COVID-19 public health emergency, states received enhanced federal funding under the law in exchange for continuously covering all enrolled Medicaid beneficiaries.

FFCRA’s continuous coverage requirements will end on April 1, after which states can begin disenrolling individuals who are determined to no longer be eligible for Medicaid. Each state must redetermine eligibility for all people covered under Medicaid; that process can take 60 to 90 days per person. Throughout 2023, the federal government will incrementally phase out the enhanced funding that states received under FFCRA. This gradual approach may ease some of the financial pressure on states to quickly complete redeterminations.

Nationwide, about 15 million people are expected to lose Medicaid coverage as a result of redeterminations. More than half will be able to transition to employer-based plans or marketplace coverage. However, a large portion (45%) may be disenrolled for administrative reasons despite still being eligible. Many of those who will lose coverage are children and are likely to reenroll in Medicaid after being uninsured for some time. This kind of “churn” — that is, being on and off Medicaid — happened regularly before the COVID-19 public health emergency, often because of temporary increases in income or failure to submit information on time.

People in the 11 states that have not expanded Medicaid eligibility as allowed under the Affordable Care Act are likely to experience churn and are also more likely to fall in the “coverage gap.” This refers to people who earn too much to qualify for Medicaid but not enough to qualify for subsidies in the marketplace (subsidies begin at 100% of the federal poverty level, or at $14,580 for an individual). Most childless adults are not eligible for Medicaid in nonexpansion states; coverage for parents is available for those with very low income only (i.e., 16% to 88% of the federal poverty level, or $3,978 to $21,877 for a family of three).

Expected Impact of Medicaid Coverage Losses

Losing health insurance coverage will have a significant impact on people’s ability to access needed care and also will affect the financial health of providers and states’ economy. States that haven’t expanded Medicaid eligibility already have higher uninsured rates than those that have expanded. These differences are particularly stark in nonexpansion states in the South and Plains regions compared to neighboring expansion states.

Those higher uninsured rates can be devastating for people’s personal and financial health. Data consistently show that people in nonexpansion states avoid care because of cost concerns and take on medical debt at higher rates.

The expected spike in uninsured rates after the continuous coverage requirement ends may be especially problematic for rural hospitals in nonexpansion states, which must absorb the costs of providing care to people without insurance. Rural hospitals in nonexpansion states are already under severe strain. Thirty percent of North Carolina’s rural hospitals and 54 percent of those in Mississippi are currently in danger of closing for financial reasons.

States Have Opportunities to Reduce Coverage Losses

Expanding Medicaid eligibility can keep people covered, mitigate coverage losses from redeterminations, provide financial relief for struggling rural hospitals, and offset the financial pressures states may face after enhanced federal funding winds down. Under the Affordable Care Act, the federal government pays 90 percent of costs for the new expansion group; the American Rescue Plan Act (ARPA) adds an enhanced federal match for new expansion states’ traditional Medicaid population for two years.

States also can extend postpartum coverage for pregnant women from the required minimum of 60 days to a full 12 months. This would protect coverage for birthing people and could improve maternal health outcomes. Twenty-nine states have already adopted the 12-month extension option available through ARPA, including seven nonexpansion states.

Lawmakers in several nonexpansion states are considering proposals to expand Medicaid eligibility or extend postpartum coverage. North Carolina, Mississippi, and Wyoming are key states to watch. Last year, North Carolina lawmakers made significant headway toward a deal on Medicaid expansion and are revisiting those efforts this year. In Wyoming and Mississippi, lawmakers have already advanced bills to extend postpartum coverage through one chamber of their legislatures.

As state Medicaid agencies begin the process of returning to business as usual, the Centers for Medicare and Medicaid Services, policymakers, and consumer groups will be watching to ensure people are not inappropriately disenrolled and have smooth transitions to other sources of coverage. In the 11 nonexpansion states, people will be at a higher risk of losing their Medicaid coverage and not having affordable alternatives. Policymakers in these states could expand Medicaid eligibility and adopt the postpartum extension option to ensure some of their most vulnerable residents remain covered and able to access care. Congress also could take action to provide affordable coverage options for people falling into the coverage gap. But given the current makeup of Congress, it is unlikely it will act before people lose coverage.