Medicaid, exchange churning to occur in all 50 states

By Joanne Finnegan

So-called churning--where eligibility changes will occur between Medicaid and health insurance exchanges--is likely to be a major challenge in every state as Affordable Care Act implementation continues, a recent study finds.

"Our findings indicate that every state is likely to experience significant rates of eligibility changes over time," researchers conclude in a study published online in March in Health Affairs.

The study looked at how many individuals and families would likely experience changes in eligibility for Medicaid or for subsidized private healthcare insurance coverage that would cause them to transition between the two options. The researchers provided state-by-state estimates of potential churning if all states expanded Medicaid under healthcare reform and identified predictors of rates within states.

Researchers expect churning to prove costly for insurers and states, with consumers ending up with coverage gaps in their insurance or being forced to switch health plans or providers, as FierceHealthPayer previously reported.

The study concluded:

  • Approximately half of adults who are likely to be eligible for Medicaid or subsidized marketplace coverage will experience changes in eligibility within 12 months.
  • Although all states will likely see high churning rates, small differences in the rates occurred across states. Those with lower poverty rates and higher per capita incomes were likely to experience higher rates as individuals' eligibility shifts between Medicaid and premium subsidies.
  • States with more generous eligibility criteria for their Medicaid programs before adoption of the ACA had higher churning rates.

Disruptions in care from churning will be more serious in states choosing not to expand their Medicaid programs in 2014, the researchers said. Those states will have large gaps in eligibility for many low-income adults whose incomes will be too high for Medicaid but too low for tax credits.

The researchers said transition issues will require attention in the future, with every state needing to address the problem. Policy options for states to reduce the frequency and impact of churning include adopting 12-month continuous eligibility for adults in Medicaid, creating a basic health program, using Medicaid funds to subsidize marketplace coverage for low-income adults, and encouraging health insurers to offer plans in Medicaid and the marketplaces.

Based on its projections, the study found that across all states, an estimated 63 percent to 72 percent of adults did not experience changes in their eligibility during the first six months. In all but two states, 40 percent to 55 percent of adults did not experience any changes during a year's time.

To learn more:
- read the full Health Affairs study

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