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In the Literature
A study examined children in California who received Medicaid coverage to ascertain the health and cost consequences of a policy change that extended the process of redetermining program eligibility from every three months to 12 months. Reducing the frequency of eligibility redeterminations was associated with higher costs, but fewer hospitalizations for ambulatory care–sensitive conditions.
Many poor children rotate in and out of Medicaid coverage. As a result, they go through periods when they have no health insurance. Federal rules require states to redetermine Medicaid beneficiary eligibility at least once every 12 months. Some states do so more often, both as a way to identify individuals who are no longer eligible and to reduce the numbers of eligible people and, therefore, costs. To improve continuity in Medicaid coverage and protect children's access to health care, in January 2001 California extended the eligibility redetermination period from every three months to 12 months.
There is widespread recognition that too many Americans are uninsured. Public coverage can make an important difference in reducing the numbers of the uninsured. The study's findings suggests that reducing the frequency of eligibility redeterminations increases the number of continuously insured people and can prevent catastrophic, high-cost health events. The authors recommend further assessment of the costs and benefits of expanding a similar approach to adults.
About the Study
The authors used California hospitals patient discharge data from the California Office of Statewide Health Planning and Development for years 1999–2002 and linked it with state Medicaid monthly eligibility data to create two cohorts of children, ages 1–17, corresponding to a two-year period before (January 1999 to December 2000) and after (January 2001 to December 2002) the policy change. The authors evaluated whether the change was associated with a reduction in the percentage of children with an interruption in Medicaid coverage, a reduction in hospitalizations, and total Medicaid expenditures.
The Bottom Line
More frequent Medicaid redetermination of child eligibility can save money for state Medicaid programs, but it comes at the risk of more children being uninsured, reduced continuity of care, poorer health outcomes, and increased hospital spending.