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Churning expected to worsen after the Medicaid expansion
The problem of "churning," when individuals cycle on and off Medicaid rolls, is expected to increase after the Medicaid expansion, according to a study published in the February 2011 issue of Health Affairs, "Issues In Health Reform: How Changes In Eligibility May Move Millions Back And Forth Between Medicaid And Insurance Exchanges."
Researchers estimated that half of all adults with incomes under 200% of the Federal Poverty Line (FPL) would experience income changes within one year that could cause a shift in eligibility between Medicaid and the insurance exchanges.
The average Medicaid beneficiary is enrolled for only three-quarters of the year, with adults retaining coverage for an even shorter period, according to a 2008 George Washington University study, Improving Medicaid's Continuity of Coverage and Quality of Care.
Churning in its current form, which means an individual goes from being on Medicaid to being uninsured, then back on Medicaid again, is costly in terms of administrative spending for states to deal with enrollment paperwork, says Benjamin D. Sommers, MD, PhD, lead author of the Health Affairs study and an assistant professor of health policy and economics at the Harvard School of Public Health in Boston. It is also costly to beneficiaries due to disrupted coverage, delays in care, and potentially adverse health effects, he says.
"The churning we discuss in our new research is somewhat different," says Dr. Sommers. "Under health reform, people with income fluctuations will move back and forth from Medicaid to the exchanges."
While this does result in administrative costs and potential adverse effects on continuity of care, Dr. Sommers says that low-income families will be much better off under health reform than they are now. "In 2014, if they lose Medicaid, at least they won't become uninsured," he says. "They can still get coverage through the exchange."
Income changes are extremely common for adults at or below 200% FPL, according to the Health Affairs study. "Each year, more than half of them will experience a month-to-month income change that is large enough to shift them from Medicaid to exchange eligibility, or vice versa," says Dr. Sommers. "This will potentially affect tens of millions of adults."
Dr. Sommers says that it's a mistake to think of the Medicaid and exchange populations as two distinct groups of people. "There are going to be millions transitioning back and forth regularly between the two programs," he says.
This sort of disruption would be very harmful for continuity of care, warns Dr. Sommers, especially for adults with chronic conditions. "The big risk is that if plans and provider networks differ between the two, people may lose benefits," he says. "They may even have to change doctors each time their income changes."
Changing to a 12-month continuous eligibility policy is one possible approach to reduce churning, says Dr. Sommers. People would be guaranteed that they could stay in a single program throughout the year and only re-check their eligibility every 12 months, he explains.
In addition, says Dr. Sommers, states should consider incentives for health plans to participate in both the Medicaid and exchange markets, using similar benefit designs and provider networks. "This would minimize the disruptions in care that could result from churning," he explains.
Churning is a long-standing problem for Medicaid, says Margaret A. Murray, CEO of the Association for Community Affiliated Plans (ACAP). "We are very concerned about the cost of churning to individuals," says Ms. Murray. "Many end up being disenrolled, despite being eligible, because of administrative problems. They come back onto the program several months later when they need care."
This causes major problems for beneficiaries who may not get prenatal care or asthma medications filled, says Ms. Murray. "They end up in the ER, and of course Medicaid pays for that," she says. "The problem has really intensified with the impending creation of the exchanges."
Not only will individuals be churning off Medicaid, but other individuals may be churning into the exchange and then out of it again, says Ms. Murray.
"We are concerned about that type of churning, too. As they move between Medicaid and the exchange, the health plans may be different, meaning the networks may be different," says Ms. Murray. "It would be fine if they just churned once, but many people will be churning multiple times."
This will result in an "enormous cost to the states and the exchanges," says Ms. Murray, for tracking eligibility, copayment levels, premiums and subsidies.
About half of states currently allow children to be continuously eligible for Medicaid for a year, notes Ms. Murray. Some states have also implemented Express Lane Eligibility systems, so that people can remain eligible for Medicaid when their redetermination data comes up, she adds.
"We have seen that when states make these changes, it does increase the level of retention," says Ms. Murray. "States have tended to do a lot more of this for children than they have for adults. Children, of course, are less expensive than adults."
Continuous eligibility for adults is not allowed under current law, and this should be changed, argues Ms. Murray. "The sooner the administration can clarify that states can do continuous eligibility, the better," she says.
Ms. Murray adds that the Secretary of the Department of Health and Human Services should be able to allow states to have continuous eligibility for adults through regulations. The PPACA gives her tremendous flexibility to make sure that programs operate efficiently," she says.
Ms. Murray says it's also important that the health plans that serve Medicaid clients can be in the exchange, so that people can go between two programs but keep the same health plan. "All of the safety net plans want to enter the exchange, but many are concerned about the reserve requirements," she says. A phase-in of the reserve requirements would make it easier for the plans to enter the exchange while building up the necessary reserve, Ms. Murray explains.
In the long run, says Ms. Murray, continuous coverage is much better for Medicaid beneficiaries, and it makes administering the program much easier for the state. "We'd like to see Medicaid administrators go from being gatekeepers keeping people out of the program, to being doormen ushering people into good quality health care," she says.
Contact Ms. Murray at (202) 204-7509 or email@example.com and Dr. Sommers at (617) 432-3271 or firstname.lastname@example.org.