HHS: 15M people could drop off Medicaid rolls after COVID-19 emergency ends

The expiration of the COVID-19 public health emergency could lead to approximately 15 million people losing Medicaid coverage, but only a fraction would likely get coverage on the Affordable Care Act’s (ACA's) exchanges, according to a new federal report.

The Department of Health and Human Services (HHS) released the report Friday outlining the estimated coverage losses in Medicaid and the Children’s Health Insurance Program (CHIP). Even though a new law extended enhanced ACA exchange subsidies, only 2.7 million of those people would qualify for tax credits. 

“Successful policy approaches must address the different reasons for coverage loss,” according to the report from the Assistant Secretary for Planning and Evaluation (ASPE). “Broadly speaking, one set of strategies is needed to increase the likelihood that those losing Medicaid eligibility acquire other coverage, and a second set of strategies is needed to minimize administrative churning among those still eligible for coverage.”

ASPE looked at data from March 2015 and November 2016 from the Survey for Income and Program Participation, which follows respondents across multiple years to examine their income and insurance enrollment. 

It looked at the eligibility criteria for people who could be most likely to lose eligibility for Medicaid or CHIP. 

At the start of the pandemic, Congress passed a law that enabled states to get a 6.2% bump to their federal Medicaid matching rate. In exchange, states agreed to not drop anyone off Medicaid for the duration of the PHE. 

Several years later, states and the Biden administration are now prepping for the emergency to finally sunset. HHS appears likely to extend the PHE another 90 days after it expires in October. 

States have 14 months after the PHE ends to redetermine Medicaid eligibility for its beneficiaries. There is a pressing concern that some people could lose coverage because of the PHE ending. 

Medicaid and CHIP enrollment has soared under the PHE, grew to 88.3 million in preliminary data from April 2022, according to an analysis from the Kaiser Family Foundation.

ASPE’s analysis showed that 8.2 million enrollees would be ineligible for Medicaid after the PHE ends, and another 6.8 million would lose coverage even if they are eligible for the program. 

“Children and young adults will be impacted disproportionately, with 5.3 million children and 4.7 million adults ages 18-34 predicted to lose Medicaid/CHIP coverage,” the report said.

Biden administration officials have said that the ACA exchanges will play an outsized role in mitigating the coverage losses. However, ASPE predicts that a small number of those who lose coverage would get tax credits that lower the cost of health insurance on the exchanges. 

“Almost one-third (2.7 million) of those predicted to lose eligibility are expected to qualify for Marketplace premium tax credits,” the report said. “Among these individuals, over 60% (1.7 million) are expected to be eligible for zero-premium Marketplace plans under the provisions of the American Rescue Plan Act.”

ASPE expects that 5 million people would obtain other coverage, primarily via employer-sponsored plans.

Another 383,000 are expected to lose eligibility for Medicaid and fall into the coverage gap, meaning they would qualify under the ACA’s expansion but reside in a nonexpansion state. 

ASPE said that HHS is taking several steps to keep coverage losses at a minimum, and states have engaged in enhanced outreach to beneficiaries.

“Facilitating enrollment in alternative health insurance coverage among those determined ineligible for Medicaid through coordination with state and federal Marketplaces and enhanced outreach and education efforts will help minimize potentially harmful gaps in health insurance coverage,” the report added.