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Policy Corner – Medicaid in Flux: Disenrollment Challenges, Texas MCO Changes, and Mississippi’s Expansion Plans

May 6, 2024 • 3 min read
Policy Corner – Medicaid in Flux: Disenrollment Challenges, Texas MCO Changes, and Mississippi’s Expansion Plans

Medicaid In the News

State Medicaid plans have been in the news recently, from “Medicaid Unwinding” to Texas’s plan to drop nonprofit children’s health plans from Medicaid to potential Medicaid expansion in Mississippi.

What is Medicaid? 

Medicaid was first enacted In 1965. President Lyndon B. Johnson signed the Social Security Amendment into law, establishing Medicare, a public health insurance for the elderly, and Medicaid, a public health insurance program for those with limited income. While Medicare is a purely federal program, Medicaid is a partnership between the federal government and the states, where the federal government contributes at least $1 in matching funds for every dollar a state spends. There are broad federal guidelines about who is eligible and what benefits Medicaid offers, but it’s largely up to each state to decide what that looks like there. As of January 2024, over 84 million individuals are enrolled in Medicaid and the Children’s Health Insurance Program (CHIP). CHIP is “the insurance program that provides low-cost health coverage to children in families that earn too much to qualify for Medicaid but not enough to buy private insurance.”

Medicaid Unwinding Leads to Mass Disenrollment 

During the COVID public health emergency (PHE), states were barred from disenrolling people from Medicaid in exchange for additional federal funding. This was referred to as “continuous enrollment.” When continuous enrollment ended on March 31, 2023, states began reviewing eligibility for Medicaid beneficiaries and disenrolled individuals who were no longer eligible or failed to complete the renewal process. This “unwinding” has not gone smoothly, with many families and individuals losing insurance due to administrative issues.
As of May 1, 2024, Medicaid enrollment has decreased by nearly 22% across all states. In other words, approximately 21 million former Medicaid enrollees have been disenrolled. Although some beneficiaries may have become ineligible since continuous enrollment, for states that have released data on the unwinding, an average of 70% of terminations occurred because of procedural reasons. Procedural reasons can range from the individual not completing the renewal process within the state’s timeline to outdated contact information, preventing them from even knowing they needed to update their information. In Nevada and New Mexico, 92% of terminations were due to procedural reasons.

Texas MCOs In Danger

The Texas Health and Human Services Commission proposes to drop the state’s three largest nonprofit children’s health plans from Medicaid and children’s health insurance contracts. This change could disrupt coverage for nearly 1.8 million Texans, including pregnant women, children, and caretakers. The proposal has faced backlash from insurers and lawmakers, who argue the change could undermine specialized care and years of community investment. The change would reduce the number of managed care organizations (MCOs) coordinating preventive, primary, acute, and behavioral care, non-emergency medical transportation, and pharmacy-covered services for pregnant women, children, and parents. Many MCOs are responsible for administering Texas’s Medicaid STAR program and CHIP. The proposal moves toward for-profit companies, given that MCO contracts are typically the most expensive for the state to cover. However, there is great concern that these new actors will fail to provide the types of services MCOs in the state have provided for years.

Mississippi Moves Forward with Medicaid Expansion 

Beginning in 2014, under the Affordable Care Act, states were allowed to expand Medicaid coverage to non-elderly adults with income up to 138% of the federal poverty line. Half of the states implemented the expansion at that time. To date, 41 states, including Washington, D.C., have expanded. Mississippi is one of the states that has yet to opt in. However, on April 29, 2024, Mississippi lawmakers agreed on a proposal to expand Medicaid in the state. The State Senate and House had differing plans but agreed to provide coverage to people with incomes up to 138% of the federal poverty line (i.e., an income of $20,000 a year) if the individual works at least 25 hours a week. The agreement still needs Governor Tate Reeves’s signature to be enacted, and the federal government may push back on the work mandate.

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