Medicaid And Marketplace Eligibility Changes Will Occur Often In All States; Policy Options Can Ease Impact
By Benjamin D. Sommers, John A. Graves, Katherine Swartz and Sara Rosenbaum
Health Affairs, April 2014 (online March 12, 2014)
Beginning January 1, 2014, the Affordable Care Act (ACA) established two pathways to health insurance for nonelderly US citizens and legal residents. The first was an expansion of Medicaid coverage for people with annual incomes of up to 138 percent of the federal poverty level in states that elected to expand their programs. The second pathway was subsidizing private coverage purchased via health insurance Marketplaces for people with incomes of 138–400 percent of poverty who do not have an offer of affordable coverage through an employer. The pathways are designed to work in tandem, but a major challenge is how to promote continuity of coverage and health care for people when their incomes and life circumstances cause them to transition between Medicaid and subsidized private coverage.
In states that opt out of the ACA’s Medicaid expansion, changes in income or family circumstance will lead many people to lose coverage entirely unless they qualify for coverage under one of the traditional categories of Medicaid eligibility: pregnancy, disability, or being the impoverished parent of a minor child. A less stark problem that presents a different set of challenges will occur in states that do expand Medicaid: the potential for moving between Medicaid and Marketplace coverage.
Both of these types of “churning”—loss of coverage and frequent transitions in the source of coverage—can cause difficulties. The total loss of coverage raises the most serious problems in terms of access to care, but frequent transitions across coverage pathways also raise important issues for beneficiaries, health plans, providers, and policy makers. From one year to the next or during any given year, many individuals and families will experience changes in eligibility either for Medicaid or for Marketplace coverage. These eligibility changes could lead to both gaps in coverage and disruptions in the continuity of care, because people might have to find new providers or change their existing health treatments if their new insurance plan uses a different provider network or covers different services than their old plan did.
Previous research has estimated that approximately half of low-income adults might experience a change in income or family circumstances leading them to transition from Medicaid to Marketplace coverage (or vice versa) each year.
From the Discussion
We estimated that approximately half (plus or minus 5 percentage points) of adults likely to be eligible for Medicaid or subsidized Marketplace coverage will experience an eligibility change within twelve months.
It is important to recognize that the eligibility changes we have analyzed are the result of an effort to expand pathways to affordable coverage for all Americans. Churning has often been used to describe the negative outcome of moving into and out of insurance coverage and becoming uninsured. In contrast, we are discussing changes that are a by-product of a system that allows for transitions among insurance pathways. These transitions increase the risks of disrupting care continuity and of having short gaps in coverage. But they represent a different (and less problematic) form of churning than that between having Medicaid or Marketplace coverage and being uninsured.
However, when low-income adults in states that opt not to expand their Medicaid programs experience a loss of income that drops them below 100 percent of poverty, most will not be eligible for subsidized coverage in the Marketplace or for Medicaid. Most nonexpansion states restrict Medicaid eligibility for adults to pregnant women, certain low-income adults with disabilities, and parents of minor children with incomes of no more than 35 percent of poverty on average. In other words, most adults who lose Marketplace subsidies in nonexpanding states will become uninsured, as has traditionally happened to adults who lose Medicaid eligibility.
Policy Implications
A number of policies have recently been proposed to mitigate the effects of churning between Medicaid and Marketplace coverage, and state policy makers should consider them in the light of our findings.
One option is for states to adopt twelve-month continuous eligibility periods in Medicaid as a means of overcoming the churning effects of periodic income fluctuations
A second, more incremental option offered in CMS’s 2012 regulations allows states to assess people’s ongoing eligibility for Medicaid using projected annual income instead of current monthly income.
A third option for states is to use Medicaid funds to purchase coverage in qualified health plans in the Marketplace for people with incomes below 138 percent of poverty.
A fourth approach is the Basic Health Program, an option under the ACA that enables states to combine their Medicaid expansions with Marketplace subsidies into a single program for individuals and families with incomes of up to 200 percent of poverty.
A fifth option relates to how and when income changes are verified.
Finally, a state option that combines enrollment and marketing strategies is to encourage certified Medicaid managed care plans to enter state Marketplaces.
http://content.healthaffairs.org/content/early/2014/03/10/hlthaff.2013.1023.abstract
Comment:
By Don McCanne
The Affordable Care Act (ACA) compounded and locked into place our highly fragmented, multi-payer method of financing health care. It is a system that makes churning inevitable – moving in and out of various plans or having no coverage at all, simply because program eligibility varies depending on each individual’s circumstances which often are in an intermittent state of flux.
As if there was not already enough instability with employer-sponsored and individual market plans, this study shows that under the two major expansions of ACA, “approximately half of adults likely to be eligible for Medicaid or subsidized Marketplace coverage will experience an eligibility change within twelve months.” Half in just the first year alone. What after that?
Eligibility change is highly disruptive to care. It changes the amounts that the individual or family will have to pay for premiums, cost sharing, and non-covered services. It changes the provider networks that vary under different plans. It can disrupt treatment programs. It can result in gaps in coverage or no coverage at all. As is typical with Medicaid, it can even change the willingness of physicians to accept the individual or family as patients.
And that line about keeping the coverage you have if you want it? Within one year, half will have a change in their eligibility. And the recommendations of the authors will only tweak the instability, but the fundamental problem will not be corrected. It is the ACA model that is irreparably flawed.
Unless we change our model of financing, instability and disruption will be the norm, not only because of shifting eligibility but also because plans obtained through employment or in the market are undergoing dramatic changes – even if less transparent – that will impact all of us with greater cost sharing, narrower networks, and other changes that none of us want. Do Americans really accept this mess as our preferred option for health care financing?
Change to a single payer national health program and this all goes away.