Report: Citizenship documentation creating problems for Medicaid

Early reports gathered by the Center on Budget and Policy Priorities (CBPP) indicate that the new citizenship documentation requirement imposed by the Deficit Reduction Act is costing some eligible U.S. citizens their Medicaid benefits and is increasing the administrative burden on Medicaid workers.

The law requires U.S. citizens to present proof of their citizenship and identity when they apply for, or seek to renew, their Medicaid coverage. Before this provision took effect, U.S. citizens applying for Medicaid were permitted to attest to their citizenship, under penalty of perjury.

CBPP analyst Donna Cohen Ross, who wrote the report, says the available evidence "strongly suggests that those being adversely affected are primarily U.S. citizens otherwise eligible for Medicaid who are encountering difficulty in promptly securing documents such as birth certificates and who are remaining uninsured for longer periods of time as a result."

According to Ms. Cohen Ross, the new requirement also appears to reverse part of the progress that states have made over the past decade in streamlining access to Medicaid for individuals who qualify, and especially for children. For example, she says, to improve access to Medicaid and reduce administrative costs, most states have implemented mail-in application procedures, and many states have reduced burdensome documentation requirements. But the citizenship documentation requirement appears to be pushing states in the opposite direction, she says, by impeding access to Medicaid. "Families must furnish more documentation and may be required to visit a Medicaid office in person to apply or renew their coverage, bypassing simpler mail-in and on-line enrollment opportunities because they must present original documents such as birth certificates that can take time and money to obtain. This is likely to cause the most difficulty for working poor families that cannot afford to take time off from work to visit the Medicaid office and for low-income families residing in rural areas," Ms. Cohen Ross says.

Trying to curb misrepresentation

Although the new requirement, which was insisted upon by the House of Representatives during the conference committee deliberations on the Deficit Reduction Act, was presented by proponents as being necessary to curb a problem of undocumented immigrants obtaining Medicaid by falsely claiming to be U.S. citizens, there never has been any evidence of such a problem, according to the CBPP report, and states' experience to date appears to confirm the lack of a problem.

To develop its analysis, CBPP contacted officials in several states that they knew had enrollment information for the period since the new requirement was implemented July 1, 2006. Ms. Cohen Ross tells State Health Watch the six states surveyed—Iowa, Kansas, Louisiana, New Hampshire, Virginia, and Wisconsin—were chosen because of the availability of data and not because they necessarily were representative of all states. But she adds they do cover states in a number of different circumstances and there is no reason to believe that the results reported from these states will differ significantly from those in other states.

According to the report, the data show the following:

  • All six states report a significant drop in enrollment since implementation of the requirement began;
  • Medicaid officials in these states attribute the downward trend primarily or entirely to the citizenship documentation requirement.

Two types of problems are surfacing, according to Ms. Cohen Ross: Medicaid is being denied or terminated because some beneficiaries and applicants cannot produce the specified documents despite, from all appearances, being U.S. citizens, and Medicaid eligibility determinations are being delayed, resulting in large backlogs of applications, either because it is taking time for applicants to obtain the required documents or because eligibility workers are overloaded with the new tasks and paperwork associated with administering the new requirement.

Ms. Cohen Ross says the Medicaid enrollment declines identified in her report do not appear to be driven by broader economic trends or a change in the employment of low-income families. If that were the case, she says, parallel enrollment declines would appear in the Food Stamp program, which is the means-tested program whose enrollment levels are more responsive to such developments. Instead, Food Stamp caseloads have been increasing slightly in recent months. Also, each of the states identified in the report as having sustained a drop in Medicaid enrollment saw the Food Stamp caseload grow during a similar period. "Both Medicaid and the Food Stamp program serve similar populations of low-income families and are often administered by the same agencies and caseworkers," Ms. Cohen Ross wrote. "A key difference is that the citizenship documentation rules were applied to Medicaid, but there were no such changes in the Food Stamp program. It thus appears that the changes in Medicaid enrollment are a result of changes in Medicaid policies, particularly citizenship documentation, that do not affect eligibility for Food Stamps.

State reports

Wisconsin reported that between August and December 2006, more than 14,000 Medicaid-eligible individuals were either denied Medicaid or lost coverage due to the documentation requirement. And the loss of coverage occurred despite state efforts to minimize the requirement's impact by obtaining birth records electronically from the state's Vital Records agency. Wisconsin observers said more people had difficulty obtaining proof of identity than proof of citizenship. Some 69% of those who were denied Medicaid or who lost Medicaid coverage due to the new requirement did not have a required identity document, compared to 17% who did not provide the required citizenship documents and 14% who were missing both a citizenship and an identity document. Ms. Cohen Ross said this situation indicates that most of those who were denied were, in fact, U.S. citizens.

The Kansas Health Policy Authority reported that between 18,000 and 20,000 applicants and previous beneficiaries, mostly children and parents, have been left without health insurance since the citizenship documentation requirement was implemented. Some 16,000 of them were classified as "waiting to enroll" or "waiting to be re-enrolled," and state officials said their eligibility determination was being delayed by a large backlog of applications related to the difficulties confronting individuals and eligibility workers alike in attempting to comply with the new rule.

Iowa officials reported identifying an unprecedented decline in Medicaid enrollment attributed to the documentation requirement. Before July 1, 2006, overall Medicaid enrollment had steadily increased for several years. But between July and September 2006, Medicaid enrollment sustained the largest decrease in the past five years. It also was the first time in five years that the state experienced an enrollment decline for three consecutive months.

"Although other factors may contribute to the recent decrease in enrollment, state officials point out the state is now experiencing a more severe effect on enrollment than it has following any of the Medicaid changes that have occurred over the past several years," Ms. Cohen Ross states. "The state's conclusion that the citizenship documentation requirement is driving the decline is supported by the fact that enrollment has dropped among the populations subject to the requirement (children and families) but has remained steady among groups not affected by the requirement (individuals receiving Medicare and SSI).

In September and October of 2006, Louisiana experienced a net loss of more than 7,500 children in its Medicaid program despite a vigorous back-to-school outreach effort and a significant increase in applications during September. State officials said the enrollment decline is not driven by population loss from Hurricane Katrina, and contrasts dramatically with enrollment spikes that usually occur in September. They cite two reasons for the drop-off: First, Medicaid is being denied or terminated for some people because they have not presented the required citizenship or identity documents, and second, the additional workload generated by the new requirement is diverting the time and effort eligibility workers would normally spend on activities to ensure that Medicaid beneficiaries do not lose coverage at renewal.

Since July 2006, enrollment of children in Virginia's Medicaid program has declined steadily each month and by the end of November, the total net decline was close to 12,000 children. In contrast, enrollment in the state's separate SCHIP program during the same time frame, which is not subject to the new requirement, increased. Virginia also reported a substantial backlog in application processing at its central processing site.

Data from the New Hampshire Healthy Kids Program, a private organization that processes mail-in applications for the state's Medicaid and SCHIP programs, indicate that the percentage of applications submitted with all necessary documents in September 2006 dropped by almost half compared with the percentage of complete applications submitted in September 2005.

Officials also estimated a significant effect of the new requirement on administrative expenditures. Illinois projected $16 million to $19 million in increased staffing costs in the first year of implementing the requirement. The Arizona legislature has allocated $10 million to implement the citizenship documentation requirement, including costs associated with staffing, training, and payments for obtaining birth records.

The FY 2007-08 budget request for the Colorado Department of Health Care Policy and Financing includes a request for an additional $2.8 million for county administration costs.

Washington hiring more staff

Washington State is projecting costs associated with hiring 19 additional FTEs in the current fiscal year due to the new requirement, and retaining seven of them in the next two fiscal years.

Wisconsin is expecting increased costs of $1.8 million to cover the workload associated with administering the requirement in the current fiscal year and $600,000 to $700,000 in each of the next two fiscal years.

And Minnesota is estimating it will spend $1.3 million in this fiscal year for new staff, birth record fees, and other administrative expenses.

Advocates in several of the states tell State Health Watch their states have had great difficulty in implementing the requirement. Jill Hanken of the Virginia Poverty Law Center says U.S. citizens "have been experiencing huge delays in Medicaid applications" and says there are 4,000 cases pending for children. Virginia, she says, has worked hard to develop a Medicaid processing system that can handle applications coming in by telephone, mail, or on-line, but that system can't easily accommodate the federal requirement that original documents be submitted and verified.

New procedures that were drafted, she says, represent "bureaucracy at its worst" and have created an unrealistic and unwieldy requirement. A big issue for U.S. citizens in Virginia is obtaining out-of-state birth certificates, which can cost $50 or more, she says. The state plans to help people pay for the documents, but no procedure to do that is in place yet. The need to present original identity documents also is creating problems, she says, with many applicants unwilling to mail in their driver's license and wait for it to be returned.

Ms. Hanken says there are a number of changes that could be made to the federal requirement that would ease implementation, including accepting copies of original documents and finding a better way to verify identity of children younger than age 16 who don't have a driver's license or other picture ID. She also would like to see the very frail elderly and disabled who are not on Medicare exempted from the requirement.

Even with such changes, however, Ms. Hanken thinks the most appropriate thing would be to reexamine the assumptions that led to the requirement and ask why U.S. citizens are being made to go through such hoops.

"Virginia was doing great work in enrolling eligible kids in Medicaid, but now net enrollment has dropped by 10,000," he reports.

No need to lie about citizenship

Linda Katz at The Poverty Institute in Rhode Island tells SHW her state was covering all children, including those who are undocumented, in its RIteCare program and thus there was no need for people to lie about their citizenship to get coverage. The governor's budget for fiscal year 2008 projects a loss of 5,300 Medicaid recipients. Ms. Katz says the state is trying to implement the program in ways that are the least harmful. One thing Rhode Island has done is to authorize outreach workers to certify that they have seen original documents and then submit a copy on behalf of their clients.

She says it would be most helpful if the requirement to verify identity through picture IDs and other difficult means would be dropped. "Tweaking the state process can't make it better," she says. "States should have the option of whether to verify citizenship. Then eliminate the identity requirement. This all interferes with the goal to simplify the application process."

In Arizona, Kim VanPelt at the Children's Action Alliance says implementing the requirement has been fairly costly for the state. "It's creating a ton of work and a ton of costs," she says. "And the results suggest we didn't have many noncitizens in our system. The decline we're seeing in enrollments is because of the hassle factor."

Ms. VanPelt says she is concerned the requirement is not addressing a problem that congressmen thought needed to be fixed. "States should have the flexibility to determine eligibility requirements," she says. "Federal micromanagement does not help produce the best results."

Interestingly, data were collected too late in Ohio to be included in the report but information now available confirms the experience in the other states. Mary Wachtel of Voices for Ohio's Children says two trends are being seen: a reduction in Medicaid enrollment and a reduction in the number of Medicaid applications being processed in a timely fashion.

Both trends started appearing one month after the state implemented the new requirement, she says, and there have been no other policy or operational changes that could account for the shift.

"We had been seeing consistent, incremental increases in the number of covered families and children," she tells State Health Watch, "and now we're seeing consistent drops." She says the Ohio Department of Job and Family Services, which administers Medicaid, recorded a reduction in 22,000 Medicaid beneficiaries between August and December 2006. And there was a 3% drop in the number of timely applications processed in November and another 3% drop in December.

Asked her view of a solution, Ms. Wachtel said Congress should go back to the previous law, which gave caseworkers discretion to ask for proof of citizenship as appropriate. "The previous law worked well," she says. "It would be a mistake to assume that citizenship was never checked. We know our caseworkers often asked for proof when they had reason to do so."

Ms. Wachtel says another problem that is arising is that caseworkers now are suspending applications while waiting for people to obtain an original birth certificate instead of moving on to request lower-level acceptable proofs of citizenship that the federal government has said can be used. The resulting delays, she says, are costing people access to needed health care.

Report author Cohen Ross tells SHW those who saw a need for the new requirement should go back and look at what happened under prior law. Four states had required proof of citizenship, with rules that were not nearly as restrictive as those set forth by the Centers for Medicare & Medicaid Services to implement the new requirement. "Other states could have required proof of citizenship," she says, "but chose to rely on signed statements given under penalty of perjury. States that were concerned about citizenship had the discretion to run their programs in a way that addressed their concerns. Other states were doing what the law permitted. Everyone agrees that only those who are eligible for benefits should receive them. But we shouldn't be accomplishing that goal by creating barriers for those who are eligible. These are very important basic health care benefits that are at stake here."

Ms. Cohen Ross wants to see improvements in state processing systems to handle the new requirement, but also would like to see a reassessment of the need for the requirement. "We need to ask if this rule is addressing a real problem," she says. "In the last 10 years, states have made great strides in simplifying Medicaid and making it more accessible. And this requirement takes them in the opposite direction."

Download the CBPP report at Contact Ms. Cohen Ross at (202) 408-1080. Contact Ms. Hanken at (804) 782-9430, ext. 13; Ms. Katz at (401) 456-4634; Ms. VanPelt at (602) 266-0707, and Ms. Wachtel at (877) 881-7860.