Stop the Churn: Preventing Gaps in Health Insurance Coverage
Two longtime Texas congressmen, Gene Green, a Democrat, who has represented the 29th district, east and north of Houston, since 1993, and Joe Barton, a Republican, who has represented the boot-shaped 6th district that stretches south from Dallas/Fort Worth since 1985, see each other on Capitol Hill several times a week. But it was outside of Washington, D.C., at The Commonwealth Fund’s annual Bipartisan Congressional Retreat in January, that the two congressmen from opposite sides of the aisle began a fruitful conversation to address one of the most serious causes of gaps in health care coverage for low-income people.
These gaps arise because of the phenomenon known as churning, the term for repeatedly gaining and losing health insurance coverage. Churning is particularly acute in the population covered by Medicaid and the Children’s Health Insurance Program (CHIP), where minor changes in family income (a dollar raise or a few more hours worked), changes in life circumstances (becoming pregnant or turning 19 and becoming an adult), or failing to keep up with the programs’ often frequent and onerous demands for paperwork to prove eligibility, can mean the difference between having coverage, or not.
Losing coverage puts low-income people especially at risk for falling into medical debt or for delaying or skipping needed care altogether because of the cost. In addition to poor health outcomes, this can ultimately result in greater expenditures for public health insurance programs because patients may be sicker by the time they re-enroll. While frequent eligibility determinations can reduce the number of beneficiaries on the Medicaid and CHIP rolls, they also jack up the programs’ administrative costs.
After their conversation at the Fund’s retreat, Rep. Green and Rep. Barton worked together to introduce the Stabilize Medicaid and CHIP Coverage Act in April, which would enact 12-month continuous enrollment nationwide in Medicaid and CHIP. This would mean that states would be required to allow individuals enrolled in Medicaid or CHIP to remain enrolled in the program for an entire year before they must re-demonstrate eligibility and re-enroll.
The Commonwealth Fund and other organizations have been calling attention to the negative consequences of churning for nearly two decades. In 1996, as welfare and Medicaid reform were debated across the country, Pamela Farley Short, Ph.D., then a senior economist at the RAND Corporation, conducted a Commonwealth Fund–supported study that found—contrary to a common public perception—low-income women didn’t stay on Medicaid for very long. More than a quarter of the women who were enrolled in the program at a point in time between 1989 and 1992 had been enrolled for 12 months or less. And of those currently on the rolls in Short’s study, more than a quarter would leave within two years. Nearly two-thirds of those women would become uninsured.1
Short, now a professor of health policy and administration at Pennsylvania State University, went on to lead additional studies that found individuals and families earning less than 200 percent of the federal poverty level (FPL) remained vulnerable to churning in and out of Medicaid and CHIP.
Short has since found that Americans experience gaps in coverage even in times of economic growth. In a study conducted between 2004 and 2007, she found that 89 million people—36.3 percent of Americans ages 4 to 64—were uninsured for at least one month.
Unstable coverage can lead to the same negative effects as having no coverage at all. A study by Commonwealth Fund staff examined data from three household surveys conducted in the mid- to late 1990s—one by the Robert Wood Johnson Foundation and two jointly by the Kaiser Family Foundation and The Commonwealth Fund—that asked respondents about their health insurance status and health care experiences. The analysis found insured adults who had recently been uninsured reported difficulties getting or paying for medical care at rates that approached adults who were currently uninsured.
Interruptions in Medicaid coverage can not only have detrimental effects on beneficiaries; in some cases, they may ultimately result in higher expenditures for the program. Researchers affiliated with the University of Florida’s College of Public Health and Health Professions and the Florida Center for Medicaid and the Uninsured examined Medicaid claims and eligibility data from January 1999 to December 2002. Their analysis found that in the three months immediately after Florida Medicaid beneficiaries with diabetes re-enrolled in Medicaid following a lapse in coverage, their hospital utilization—both in-patient services and emergency room visits—was greater than during the three months prior to their disenrollment. This led to an estimated $239 per member per month increase in expenditures in the three-month period following the coverage lapse.
Frequently re-enrolling beneficiaries also leads to higher administrative costs for programs. With support from the Foundation for Child Development, Gerry Fairbrother, Ph.D., and colleagues estimated that it costs Medicaid or CHIP almost $280 to enroll a child in the New York City area—more than two months of premiums paid to Medicaid managed care organizations. They estimate that the cost of enrollment could be reduced by 40 percent with a simplified system.
Since the passage of the Balanced Budget Act of 1997, states have had the option of providing 12-month continuous eligibility to children enrolled in Medicaid and/or CHIP. But today, almost 16 years later, fewer than half of states provide 12-month continuous eligibility to children enrolled in Medicaid, and just over half provide it to children enrolled in CHIP. While the Affordable Care Act will soon lead to major coverage expansions and insurance market protections, churning will continue to be a problem. Guaranteeing all Medicaid and CHIP enrollees coverage for a full year before they must renew eligibility would make a big difference in improving health insurance stability among those who are the least likely to have it.
1 P. F. Short, Medicaid’s Role in Insuring Low-Income Women (New York: The Commonwealth Fund, April 1996).