Health Reform WK-EDGE Quickly expanding Medicaid to cover newly unemployed has challenges
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Wednesday, April 8, 2020

Quickly expanding Medicaid to cover newly unemployed has challenges

By Rebecca Mayo, J.D.

Medicaid expansion could potentially provide coverage to many who have just lost their jobs and health insurance, but there are hurdles to expanding eligibility and it could be slow.

As unemployment rates skyrocket and many people lose their health insurance in the middle of the COVID-19 pandemic, states may consider expanding Medicaid eligibility. The Urban Institute and Manatt Health reviewed the challenges that states may face in being able to quickly expand eligibility and the ways CMS may be able to assist states in overcoming these challenges. According to the Urban Institute, "the nation’s public health depends on people being able to receive treatment for the virus, and this large, newly low-income population will be at risk for not seeking or receiving necessary care." Uninsured individuals may go to health centers or hospitals when they are infected and need care, and states and localities will be left to pay for much of the ensuing uncompensated care. Others may not receive needed treatment, which will increase the spread of the virus and impose the economic consequences of a continuing health crisis, including lost state revenue. However, quickly expanding Medicaid eligibility comes with its own challenges and full federal support, or at least a limited period, may be critical to states’ ability to take on such a move.

Challenges. Each state’s plan to expand Medicaid would still be required to go through an approval process. The state can either expand through it’s "state plan" authority or through a waiver. However, CMS has demonstrated its ability to expedite its approval process in its approval of Louisiana’s eligibility expansion special plan amendment, which took only three weeks to be approved. States also need to ensure system readiness to enroll larger number of applicants, including modifying IT systems, working with hospitals to help with enrollment, and potentially expanding provider networks. If CMS were to allow a state to phase in eligibility with the enhanced matching rate, it could ease the increasing enrollment burden on a state’s system. Under this model, states could phase in enrollment starting with geographic areas hardest hit by the virus, increased unemployment, or by income group, age, or some other categorization.

Early-expanding states, that expanded Medicaid after the Patient Protection and Affordable Care Act (Affordable Care Act) was passed, received three years of full federal funding for their expansion costs. However, late-expanding states are required to contribute 10 percent of the costs associated with the expansion population. Although the need for additional coverage is peaking, state revenues are expected to plummet because of the rising unemployment and depressed economic activity. Medicaid expansion should theoretically result in savings for states, but the financial commitment to contribute 10 percent will likely be a continuing barrier for some states. If the government were to eliminate or lower the state contribution for at least three years, phasing up to 10 percent in subsequent years, as it did for the early-expanding states, it may allow more states to expand coverage.

IndustryNews: NewsStory AccessNews Covid19 EnrollmentNews FederalFMAPNews HealthInsuranceExchangeNews MedicaidNews MedicaidExpansionNews

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