When the national health law takes effect on January 1, 2014, some 30 million uninsured people will be able to sign up for subsidized health insurance for the first time. Many will become eligible for Medicaid and others will qualify for federal tax credits.
As challenging as that initial process is expected to be for consumers and state administrators, it won't end there. As people's incomes shift, nearly a third of those who sign up for Medicaid in 2014 will become ineligible for the program by the end of the year, according to a study by The Urban Institute. Among those who use federal tax subsidies to buy insurance through a health insurance exchange, more than half will lose their eligibility within a year.
This phenomenon — known as “churn” — already affects millions of Medicaid recipients whose incomes fluctuate. Starting in 2014 as Medicaid eligibility rules change and new federal tax credits become available, the number of people who will be forced to switch health plans is expected to increase. In many cases, members of the same family will lose Medicaid coverage while others remain enrolled.
To mitigate the disruptive effects of churn on families and the health care providers who serve them, some states are easing application and renewal requirements so that Medicaid beneficiaries can maintain coverage for at least 12 months.
In Tennessee, where nearly all Medicaid enrollees are covered by a managed care plan, state officials are seeking federal approval for a program called “one family, one card.”
Presenting at last week's annual meeting of the National Academy for State Health Policy in Baltimore, Brian Haile, director of Tennessee's exchange initiative, said the plan is designed to “minimize the times people get a letter from us (saying they're eligibility has changed) and maximize their focus on keeping health care coverage and staying healthy.”
A longstanding problem in the Medicaid program, churn not only causes loss of coverage, but higher administrative costs and disruptions in ongoing medical treatments. It also makes it difficult for doctors to invest in preventive health care programs and for researchers to study their effects on patients.
“Every day we see people walking into our hospitals whose conditions have gotten worse during periods in which their Medicaid coverage has lapsed,” said former National Association of Public Hospitals and Health Systems vice president Lynne Fagnani in a 2011 press statement. “Too often they've forgone medical care when they needed it and then show up in emergency rooms in worse shape, requiring more expensive care.”
Under its proposal, Tennessee would ask the managed care companies that provide Medicaid coverage to also offer an insurance plan that covers 70 percent of health care costs. It would be offered through the health care exchange, required under the new federal law, and would be available only to families with at least one member covered by Medicaid. The network of doctors and hospitals available to the family under this plan would be identical to the network that serves Medicaid patients.
Without Tennessee's proposed option, a hypothetical family of three with a household income at 150 percent of the federal poverty line would face complicated insurance arrangements in 2014. The mother, if she is pregnant, would be covered by Medicaid. The father would qualify for tax credits to help pay for private insurance through the exchange. Their 6-year-old child would qualify for the State Children's Health Insurance Program (CHIP). The newborn would qualify for Medicaid.
The Tennessee proposal would bypass the three different health cards and three different sets of doctors, and instead issue the family one card that could be used with the same doctors and hospitals that serve the Medicaid program. And even if the family members' circumstances changed again, the entire family could continue to use the same card and the same network of doctors, as long as at least one of them remained eligible for Medicaid.
Tennessee's plan is just one possible way of alleviating the harmful effects of churn. But it has piqued the interest of several other states, Haile says.
Another method recommended by The Urban Institute and others is for states to create what the Affordable Care Act calls a “basic health program,” in which people at income levels between 138 percent and 200 percent of the federal poverty level, where a large percentage of churn occurs, could be covered by a Medicaid-like plan, even though they would not qualify for Medicaid.
The federal government has offered to pay 90 percent of the cost of these programs, but it is unclear how many states will take up the option.