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A meager 3% of Americans obtained health coverage through the Affordable Care Act exchange within one year of leaving Medicaid or the Children’s Health Insurance Program, according to new findings published by the Medicaid and CHIP Payment and Access Commission (MACPAC).
Examining data from Medicaid, CHIP and the ACA marketplaces from 2017 through 2019, authors found that most beneficiaries who disenrolled from Medicaid or CHIP in 2018 returned to the same program within 12 months – a phenomenon referred to as “churn” – or just didn’t enroll in another insurance affordability program.
The rate of transition to exchange coverage was higher for adults enrolled in Medicaid (3.9%) and children enrolled in separate CHIP (3.3%) than for children enrolled in Medicaid in states with separate CHIP (1.6%).
That rate is far lower than previous estimates. Prior to the implementation of the ACA coverage expansion, the Urban Institute estimated that about one quarter of Medicaid enrollees who lost coverage would be eligible for exchange coverage.
One reason for this discrepancy may be that beneficiaries who are eligible for exchange coverage may not enroll because of premiums, administrative barriers to enrollment, or other issues. One study in Colorado found that enrollment among those close to the 138% federal poverty level threshold was 81.3% lower in the exchange compared to Medicaid, suggesting that many of these potentially eligible adults did not enroll in exchange coverage.
WHAT’S THE IMPACT
Beneficiaries moving from Medicaid or CHIP to exchange coverage were much more likely to experience gaps in coverage than beneficiaries moving between other insurance affordability programs, data showed. For example, less than one quarter of children moving between Medicaid and CHIP experienced a gap in coverage, but more than 70% of adults and children moving from Medicaid to exchange coverage had gaps.
At a state level, there was considerable variation in the share of beneficiaries with a gap in coverage when moving from Medicaid to exchange coverage. For example, more than 90% of adults in New Hampshire and Tennessee experienced gaps in coverage when moving between coverage, compared to 62% of adults in Louisiana and Oregon.
On average, the gap between Medicaid and exchange coverage was about three months for people who successfully moved between programs. But this gap was longer for Black, Hispanic, and Native American and Alaskan Native beneficiaries. White, non-Hispanic adults moving between Medicaid and exchange coverage had an average gap of 73 days, while Black, non-Hispanic adults making the same coverage transition had an average gap of 105 days.
THE LARGER TREND
Under the Families First Coronavirus Response Act, states have been eligible to receive a 6.2 percentage point increase in the federal medical assistance percentage (FMAP) during the COVID-19 Public Health Emergency if they maintain Medicaid enrollment for all beneficiaries. This continuous coverage provision is currently scheduled to end the month when the PHE ends, and when it does, states will need to begin processing Medicaid redeterminations again and transferring applicant data to other insurance affordability programs if appropriate.
Many eligible individuals may not enroll. Some factors that may contribute to low enrollment in exchange coverage include administrative barriers with transferring applications between public coverage programs, and policy differences between Medicaid and exchange coverage, such as premiums.
Administratively, states are required to transfer applications from Medicaid to the exchange if people are potentially eligible, but in practice these account transfers don’t always work as intended. In particular, beneficiaries often must provide additional information to complete an application for exchange subsidies since some of the unique information needed to assess eligibility isn’t collected as part of the Medicaid or CHIP renewal process.
To address some of these administrative challenges, CMS has been providing states with additional guidance on steps that they can take to smooth transitions between insurance affordability programs. These strategies include improving notices, transferring beneficiary contact information, and working with community-based organizations to assist applicants in gathering additional information that is needed to complete an application for exchange coverage.
The higher premiums for exchange coverage compared to Medicaid or CHIP may also be a barrier to enrollment. But in 2020, the American Rescue Plan temporarily expanded the amount of subsidies for exchange coverage, and expanded the number of people eligible for subsidies to include those with family incomes below 600% of the FPL.
On average, these subsidies reduced the cost of exchange coverage by $70 a month for people enrolled in the exchange, including $0 premiums for many with incomes below 150% FPL. Under current law, these expanded premium subsidies expire in 2023.