Why Millions Could Lose Their Medicaid Coverage In The Coming Months

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Today’s newsletter is about the possibility that millions of Americans could soon lose their health insurance, thanks to a pair of ongoing political developments — one you’ve probably heard about, and one you might not have.

The first development has been in the news a lot this week. It’s Republicans’ determination to hold the economic hostage by refusing to let the federal government borrow enough money to pay its bills, unless President Joe Biden and those in his party agree to a number of federal spending cuts.

A bill that House Republicans passed on Wednesday specified the proposed cuts. One of them would result from introducing new work requirements for Medicaid, the federal-state program that pays health care expenses for more than 90 million low-income Americans. To qualify under the GOP proposal, adults between the ages of 19 to 55 without dependents would have to spend at least 80 hours a month working, undergoing job training or volunteering in their communities.

Republicans’ official, stated rationale for adding these requirements is that they will encourage people to work. An unofficial, and generally unstated, rationale is that if people are so lazy that they won’t work, then they don’t deserve health insurance.

Neither argument holds up well to empirical scrutiny, for HuffPost’s reasons Arthur Delaney has discussed previously.

Most non-disabled people on Medicaid already work or face significant barriers to work, such as caregiving responsibilities, according to the health care research organization KFF. And there’s no evidence that making Medicaid conditional upon work will encourage more people to get jobs.

In fact, when Arkansas added work requirements to Medicaid in 2018, there was no change in employment levels. There was, however, a significant decline in Medicaid enrollment.

Over the course of seven months, about 18,000 people lost coverage, amounting to one-fourth of those subject to the new conditions. And according to a retrospective study in The New England Journal of Medicine, there was good reason to think most of these people were actually satisfying the work requirements ― in other words, they had jobs, were in school, and so on. It was the process of reporting their status, and verifying it, that tripped them up.

This was entirely predictable, based on past studies of similar rules — not to mention the intuition of anybody familiar with the bureaucratic gauntlet that low-income people frequently have to run to get basic assistance. A federal judge promptly put a stop to the Arkansas experiment, saying it was inconsistent with the rules of Medicaid, as set forth in federal law.

House Republicans now want to change that law, in a way that would require all states to impose the work requirements. the Congressional Budget Office predicts that 600,000 would lose health insurance as a result. Researchers at the Center on Budget and Policy Prioritiesa left-leaning Washington think tank, have warned that the number could be even higher.

This doesn’t seem to trouble Republicans, perhaps because it means less federal spending on Medicaid — and more money to offset the tax cuts they desperately hope to pass.

Biden and other Democrats, on the other hand, want nothing to do with it. They have said they won’t even discuss spending cuts until Republicans agree to raise the government’s borrowing limit. They also oppose the work requirements on substantive grounds, precisely because of their potential to take insurance away from people who need it.

Biden and Senate Democrats may well have enough leverage to prevail on work requirements. But even if they do, there’s a whole other threat to health insurance. This is the political development you may not have read about much in the news: the possibility that millions with Medicaid coverage will lose it now that special rules connected to COVID-19 have expired.

The Great ‘Unwinding’ Has Begun

As part of its pandemic response, the federal government gave states extra money to finance Medicaid, as long as they agreed not to make people reestablish eligibility as they normally would. The thinking was that, in the midst of a public health emergency, it made sense to maximize the number of people with coverage ― and to minimize the bureaucratic hassles that they would face to get or stay on the program.

With that arrangement ending, states can start requiring Medicaid recipients to reestablish their eligibility as soon as they wish. Wonks are calling this the “unwinding.”

The danger here is the same basic problem of work requirements: that paperwork and bureaucratic complexities will prevent low-income Americans from getting Medicaid even if they qualify.

“They look like they’re eligible; they’re just not completing the process to show it,” Joan Alkerthe executive director of Georgetown University’s Center for Children and Families, explained in a recent interview with HuffPost. “That’s really what we call a red tape loss.”

Some states are taking action to minimize these kinds of coverage reductions. Oregon, for example, has introduced automatic, continuous eligibility for younger children, so that any kid who gets on Medicaid will stay on the program until they turn 6, unless a family member removes them.

That means the state could end up paying to cover some young children who don’t need government assistance. Oregon officials aren’t daunted. They think it’s a small price to pay to simplify the system and get coverage to more kids ― especially if insuring those children means fewer medical bills in the future.

But not every state is so committed to minimizing Medicaid coverage losses as pandemic rules end, according to a report that KFF released this week.

Some states are rushing through the process, while others are taking their time. Some are following up with people who failed to verify before terminating coverage, while others aren’t. Among those that seem the most aggressive are states run by Republican governors like Florida’s Ron DeSantis, who last year urged the Biden administration to end the COVID-19 rules that prevented them from paring down their Medicaid rolls.

Estimates from KFF and the US Department of Health and Human Services suggest that as many as 17 million people could lose Medicaid as states begin verifying eligibility again. Some will find other sources of coverage. Some won’t.

It’s not too late for state officials to act in ways that slow the process, and make it as simple and technologically seamless as possible, so that low-income residents who qualify for Medicaid stay on the program. But time is running out.

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