Federal spending bill would end pandemic provision that led to record Medicaid enrollment

Jun 20, 2023

States would once again be able to terminate residents’ Medicaid coverage if the federal spending bill working its way through Congress becomes law.

The legislation would phase out the requirement that prevents states from disenrolling Medicaid recipients as long as the national public health emergency is in effect in exchange for an enhanced federal match. This continuous coverage measure was enacted as part of a Covid-19 relief package passed in March 2020 and has led to a record 90 million enrollees in Medicaid, many of whom may no longer meet the income requirements to qualify.

Under the spending bill, states would be able to begin processing Medicaid redeterminations as of April 1. The legislation also calls for phasing down the enhanced federal match between April and the end of 2023, a longer time frame than the relief measure currently in effect would provide. That would relieve states of some of the pressure to winnow their Medicaid rolls quickly.

Estimates vary on how many people would lose their Medicaid benefits, though they range as high as 19 million. Many folks, however, could qualify for other coverage.

The spending bill provision would eliminate the uncertainty that state Medicaid agencies have had to contend with as they wait to hear every 90 days whether the Biden administration will continue renewing the public health emergency. It has been extended 11 times since it was declared in early 2020.

While states have been preparing for the unwinding of the continuous coverage requirement, the lack of a start date has made it difficult for them to fully plan, deploy the necessary staff and solidify clear messaging for enrollees, said Jack Rollins, director of federal policy at the National Association of Medicaid Directors, which advocated for the provision.

"States have been kind of crouched at the starting line for quite some time now," he said, noting that most have been checking enrollees’ eligibility during the pandemic but not taking any action.

"If you don't have a date, it's hard to help [Medicaid recipients] understand and appreciate what is coming and what is required of them," he added.

State agencies, however, would face multiple hurdles in unwinding the continuous coverage provision, said Jennifer Tolbert, associate director of the Program on Medicaid & Uninsured at the Kaiser Family Foundation. Many are short staffed and have to work with antiquated technology. Plus, they would need accurate contact information for their enrollees, which has always been a challenge but could be even more so during the pandemic, when more people may have changed addresses.

Starting in April, millions of Medicaid enrollees would lose their coverage because they no longer meet the requirements, particularly the income limits, if the spending bill becomes law.

But others who remain eligible could be disenrolled for procedural reasons, including failing to respond to requests and provide the necessary information to state agencies, which has long been a problem in the Medicaid program.

A total of roughly 15 million people could be dropped from Medicaid when the continuous enrollment requirement ends, according to an analysis the Department of Health and Human Services released in August. About 8.2 million folks would no longer qualify, but 6.8 million people would be terminated even though they are still eligible, the department estimated.

Aware of this situation, lawmakers added various provisions in the spending bill aimed at minimizing the number of eligible enrollees who would be kicked out. States would have to attempt to update recipients’ contact information and would have to make two efforts to reach them using different methods – such as mail and email – before disenrolling them.

States also would have to publicly report a variety of metrics, including how many eligibility renewals are processed each month, how many redeterminations result in terminations, how many people are referred to Affordable Care Act exchanges for potential coverage and how many actually enroll in plans. Agencies could face penalties or have their disenrollments halted if they fall out of compliance.

It would take a long time for states to process the redeterminations of all their Medicaid enrollees. They would have 14 months to do so, according to guidance HHS issued relating to the eventual end of the public health emergency. Most states said prior to the spending bill that they plan to take between 9 and 12 months.

Just how many people dropped from Medicaid would wind up uninsured is not known. Some of those eligible would subsequently meet the requirements to rejoin the program. And others could transition to Affordable Care Act coverage, which has more generous subsidies for lower-income Americans through 2025, or to work-based policies.

Much of it would depend on how the states handle the redeterminations.

"The reality is there will be greater coverage losses in some states than others," Tolbert said.