Can the health insurance system handle major Medicaid cuts?

Imagine losing your health insurance and becoming uninsured. Before the pandemic, in most states, people enrolled in Medicaid could suddenly become ineligible if their income rose above the threshold in one month. Such a situation was inevitable for many, as income could be exchanged with seasonal, temporary or freelance work.

During the pandemic, public health emergency policies temporarily halted these monthly eligibility determinations, and Medicaid coverage expanded nationwide. But the “unwinding” of these supplies that began in April could force many. 15 million people Outside of Medicaid rolls. It is not entirely clear whether these people will get new coverage. Nor is the impact of the transition on their security..

We know that any coverage disruption or transition can be stressful and lead to a variety of problems, such as causing people to lose contact with their health care providers. Disruptions in coverage can discourage patients from seeking treatment Recommended care And it can lead to an increase Emergency room Visits, at first, can be more expensive than recommended treatment.

How the U.S. came to find itself in this widespread and void of insurance coverage is relatively simple. While the federal government increased its contribution to Medicaid to fight the pandemic, the extra money came with a caveat: States could receive it only if they ended redeterminations, a policy that kicks enrollees off Medicaid if their incomes are above certain thresholds. The result of this change is that Medicaid enrollment is growing. About 25 percent.

Thanks for this and others temporary security policies, Insurance coverage stabilized during the pandemic. In fact, the number of uninsured people has reached a record low 26.4 million In the first quarter of 2022. In 2019, for comparison, about 33 million People didn’t have insurance.

For those who have or will soon lose Medicaid as monthly redeterminations begin, and for millions of others who may lose insurance for other reasons, such as job loss, three recent policy developments could boost their chances of getting new coverage.

First, the Inflationary Reduction Act (IRA) adds epidemic-related increases to tax credits provided by the Affordable Care Act (ACA). These tax credits subsidize insurance for low- to moderate-income people without affordable employment-based coverage. These increases have contributed Record-breaking registration In insurance plans, excess 16 million Compared to 2023 registrants 11 million Subscribers in 2020. Our work suggests tax credit reforms At least 3 million From those new subscribers.

Second, for families who were offered disproportionate premiums for work-based coverage, a recent federal law fixed a long-standing problem that left them ineligible for federal assistance. The rule change now extends ACA tax credit eligibility to nearly 5 million people.

Third, as of early 2020, six states (Missouri, Nebraska, North Carolina, Oklahoma, South Dakota, and Utah) have begun offering coverage through the ACA’s Medicaid expansion or have voted to do so in the near future. According to data from the health nonprofit KFF, these policies tend to expand coverage. More than 400,000 people.

Still, these flatten into an imperfect system, and many gaps remain. For starters, ACA tax credits are only available to people without “affordable” work-based coverage. But employer coverage is considered affordable even if employees have to pay more than 9 percent of their earnings. As a result, someone earning $20,000 would have to face a premium of more than $1,800 a year to qualify for the ACA tax credit.

The same individual would be eligible for free marketplace coverage if they did not have employer-sponsored insurance. What’s more, adults in the 10 states that did not expand Medicaid under the ACA, including Georgia, Florida and Texas, often lack affordable insurance options. near 3.5 million people Stay in this cover gap.

As insurance eligibility in the United States depends on income, employment status, age, location and other factors, insurance transitions will continue long after the recent loss of Medicaid coverage. But this loss of coverage by so many at once highlights a persistent problem in the US health care system, where switching between insurers can cause disruptions in people’s health care.

There are already many good options for reducing insurance coverage. One simple solution would be to limit Medicaid eligibility determinations to once a year instead of monthly. The Consolidated Benefits Act of 2023 took a step in this direction by requiring states to provide Medicaid-eligible children with 12 months of continuous coverage, even if their family income changes. High income eligibility limits as well Reduce the risk of subscribers Losing and regaining Medicaid eligibility, because changes in income are less common when income increases.

Policymakers can fund consumer assistance programs that help people get new coverage, help people who lose Medicaid eligibility and, if necessary, apply for new subsidies through the ACA marketplaces. Increasing network eligibility criteria, which sets standards related to the number of providers that must be included in insurance networks, may ease the transition by reducing the likelihood of a provider falling out of network.

Policymakers can provide premium assistance to low-income working families who do not qualify for sales tax credits. Those that have been doing more could expand their Medicaid programs to reduce the chance that people would slip away from affordable health insurance options, which many already do: In 2014, 25 states had not expanded coverage. Only 10 are available now. While the United States has made significant strides in recent years to expand insurance coverage, policymakers should be cautious of backslides, especially when temporary pandemic-era policies run out.

Christine Ebner is a senior economist and policy analyst at the Paul O’Neill Alcoa nonprofit, nonpartisan RAND Corporation.

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