Quick Medicaid exits could cost us

FILE — The Arkansas Department of Human Services at Donaghey Plaza in Little Rock is shown in this 2019 file photo.
FILE — The Arkansas Department of Human Services at Donaghey Plaza in Little Rock is shown in this 2019 file photo.

As reported by the Arkansas Democrat-Gazette, the Arkansas Department of Human Services (DHS) recently released its first report on the number of people dropped from Medicaid as the program's pandemic-related enhancements phase out.

States across the country now face the task of eligibility redetermination, identifying individuals who maintained Medicaid coverage through the pandemic, but may no longer qualify. DHS' April report, however, demonstrates that an overwhelming majority of disenrollments were related to paperwork requirements, not actual ineligibility.

Normally, states "redetermine" eligibility for Medicaid once a year, requiring enrollees to complete paperwork to maintain their coverage. As a condition of receiving enhanced federal funding from the Families First Coronavirus Response Act, an early piece of pandemic legislation signed into law by President Donald Trump, states were prohibited from disenrolling people from their Medicaid programs. This requirement was lifted and, according to federal requirements, states are able to start initiating renewals.

Arkansas is among the five states that have already started disenrolling individuals; most states aren't starting their "return to normal" Medicaid operations until July.

Federal estimates suggest that nearly 7 million people across the country could lose their Medicaid coverage despite still being eligible, due to "administrative churning." This occurs when enrollees have challenges navigating the redetermination process and states are unable to contact enrollees because of a change of address or other administrative barriers.

According to DHS' recent report, over 50,000 people were disenrolled for procedural reasons, like failure to return paperwork or requested information, or because the state didn't have their correct address on file. Only 15 percent of those who were disenrolled were confirmed truly ineligible or said they no longer needed their coverage, likely because they acquired another source of coverage during the pandemic.

The federal government has given states up to 14 months to complete the process, and Arkansas is the only state trying to complete all redeterminations in a six-month period. DHS has the time to slow down to identify what is driving these procedural terminations. Over-acceleration may even jeopardize the state's access to enhanced federal funding to support program administration over the unwinding process.

A major piece of information that suggests DHS should take a deeper look at what's happening with the redetermination process is its disenrollment numbers among children. Forty percent of those who recently lost coverage were kids. Children are generally among those with the most stable eligibility and are among the most at-risk because of challenges their parents or caretakers face in the enrollment and renewal processes.

DHS' unwinding plan states that "Arkansas is moving swiftly ... to protect taxpayers and to restore the integrity of the Arkansas Medicaid program." But moving too quickly could actually cost taxpayers more in the long run.

Research suggests that the majority of people who lose their Medicaid coverage experience a gap in coverage and then end up returning to the program or become uninsured entirely. When individuals experience a temporary loss of coverage or are uninsured, they still need health care. However, instead of being borne by the Medicaid program, these costs become uncompensated care, which further burdens hospitals and the state budget.

This isn't the first time increased administrative paperwork has triggered problematic coverage loss in the state's Medicaid program.

In 2018, Arkansas implemented a requirement that Medicaid enrollees must engage in work or other qualifying activities and report their work or exemption online in order to maintain their coverage. The requirement was in effect for less than a year when a federal judge halted its use. Research found that 18,000 adults lost coverage, even though nearly all (more than 95 percent) of enrollees met the requirement or qualified for an exemption. Qualitative and descriptive survey research suggest that this coverage loss was due to lack of awareness surrounding the requirement and onerous work reporting processes.

Introducing administrative hurdles and restricting eligibility are two ways states can offset Medicaid spending. But these decisions have unplanned consequences, signaling neither good stewardship of the taxpayer's dollars nor data-informed policymaking.

The Gov. Sarah Sanders administration should consider pausing the redetermination process to figure out why so many Arkansans--especially children--are falling through the cracks. To continue on the path of unexamined coverage loss could usher Arkansas into a new chapter defined only by unintended impacts on the fiscal well-being of local health-care providers and even graver long-term health outcomes for some of the most vulnerable Arkansans.

Marlee Stark, who lives in Fayetteville, is a recent graduate of the Master in Public Policy program at the Harvard Kennedy School of Government, and is focused on equitable economic growth policy in northwest Arkansas. Gabriella Aboulafia researches health insurance coverage and access issues as a Ph.D. in Health Policy student at the Harvard Graduate School of Arts and Sciences.

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