How the resumption of Medicaid redeterminations could affect enrollment

Three years after the CDC announced the first Covid-19 case in the US, continuous Medicaid coverage—one of the final vestiges of pandemic-era life—is set to go the way of masks, social distancing, and the national obsession with sourdough starter.

Beginning April 1, states can once again cut off individuals who are no longer eligible for Medicaid coverage, which is something the federal government has barred since March 2020.

As many as 14 million people could lose Medicaid coverage when the continuous enrollment provision ends, according to estimates from the Kaiser Family Foundation. The policy change could have major financial implications for states and the insurers they partner with to provide Medicaid coverage.

“We’re going to have the biggest disenrollment from Medicaid in the history of the program. That’s going to be something that potentially is going to be really challenging for beneficiaries to navigate,” said Jamie Daw, an assistant professor of health policy and management at Columbia University Mailman School of Public Health. “A lot of people who study Medicaid are really watching closely to see how the states actually implement the unwinding and how they go about disenrolling people.”

How we got here

The Families First Coronavirus Response Act, which was signed into law in March 2020, allowed states to get an increased Medicaid reimbursement, known as the Federal Medical Assistance Percentage (FMAP), if they agreed to not kick residents off the joint state-federal health insurance program for the duration of the public health emergency.

Medicaid enrollment ballooned under the provision because people who normally would have been ineligible due to changes in income, the end of a pregnancy, or other reasons continued to receive coverage. More than 84.4 million people were enrolled in Medicaid as of October 2022—up from the 64 million enrollees as of January 2020, according to the latest available federal data.

But Congress included language in a December 2022 spending bill that decoupled the unwinding of continuous Medicaid coverage from the federal Covid emergency, setting a new end date of March 31.

What’s next

States must begin Medicaid renewals by April 2023. (The process could begin as early as Feb. 1, but eligibility terminations may not take effect until April 1.)

Renewals for all enrollees must be initiated within 12 months of the start of a state’s unwinding period and completed within 14 months, according to federal guidance.

The federal government will phase out the temporary FMAP increase in the coming months—from the current 6.2 percentage points to 1.5 percentage points by the end of 2023. States must continue to meet certain premium and eligibility requirements to receive the increased reimbursement during the phaseout.

How insurers are preparing

Centene Corporation CEO Sarah London told investors in a Feb. 7 earnings call that the company has launched eligibility likelihood modeling ahead of the resumed Medicaid redetermination process. The company has also worked with state partners to prepare for the potential effects a Medicaid population change could have on program rates.

Centene has developed plans to offer marketplace coverage to members who lose Medicaid access—up to an estimated 200,000–300,000 people during the redetermination process.

Medicaid growth under the continuous coverage provision helped drive a 15% increase in Centene’s total revenue streams last year—$144.5 billion in 2022, up from $126 billion in 2021, according to earnings data released on Feb. 7. Centene adjusted its 2023 outlook to reflect a $1.5 billion increase in Medicaid premium revenue before redeterminations resume on April 1.

Centene’s Medicaid plans had nearly 16 million enrollees as of December 2022, compared to 15 million in Q4 2021.

John Rex, EVP and CFO for UnitedHealth Group, told investors in January that the company also expects “to serve even more people” across its state-based, commercial, and exchange plans once Medicaid redeterminations are completed.

“We are working closely with our state partners to help people understand what they need to do to keep their Medicaid coverage,” UnitedHealth spokesperson Christina Witz said in a statement. “If they no longer qualify for Medicaid, we are prepared to help educate them on other available and affordable health plan offerings, such as individual and family plans or employer-sponsored options, that can meet each person’s unique needs.”

UnitedHealth Group Medicaid plans had more than 8 million enrollees as of December 2022.

Aetna is also working with states to prevent enrollees from “falling through the cracks,” according to Robert Joyce, a spokesperson for CVS Health, which acquired Aetna in 2018.

“We’re collaborating with Medicaid agencies to identify people unlikely to meet standard eligibility criteria early,” he said in an email. “States and [managed care organizations] can work together to identify which Medicaid members might lose coverage, then educate and help them understand their options. We’re also reaching out to those who are likely eligible but are hard to contact, and leveraging data to optimize member outreach.”

Aetna provided Medicaid coverage to about 2.7 million people as of September 2022, up from 2 million as of the end of 2019.

Elevance Health President and CEO Gail Boudreaux, meanwhile, said in a January earnings call that the company—which offers Anthem Blue Cross and Blue Shield and affiliated plans in 14 states—is “committed and prepared to ensure seamless transitions of those Medicaid members as they move into exchange plans or employer-based coverage.”

John Gallina, EVP and CFO of Elevance Health, added that Medicaid membership is “expected to end the year in the range of 10.8 million–11.3 million, driven by the attrition associated with eligibility redeterminations beginning on April 1.”

Medicaid growth and higher premiums helped Elevance Health rake in $949 million in profit in Q4 2022. More than 11.5 million people were enrolled in Elevance Medicaid plans at the end of last year, compared to 10.6 million in December 2021.