Unpacking the Postpartum Coverage Extension Option in the COVID-19 Relief Bill

Earlier this month, the House Energy and Commerce committee released a COVID-19 relief package that included a slate of Medicaid improvements, including significant incentives for the holdout states to expand Medicaid coverage to all low income adults. The bill also includes a Medicaid state plan amendment option to offer pregnancy-related Medicaid and CHIP coverage for one year after the end of pregnancy, extending coverage well beyond the current cutoff of 60 days.

This option responds to growing state and federal concern about rising maternal mortality rates, particularly among low income birthing people and pregnant people of color. Because it is an option instead of mandatory, however, there will still be postpartum people who do not receive the extended coverage if they live in a state that does not elect the option.

Both policies–expanding coverage for all adults and extended postpartum coverage– will significantly increase access to health coverage for people of childbearing age, and support parent and infant health.  We have significant evidence that Medicaid expansion closes coverage gaps for pregnant people before, during, and after pregnancy, and expansion has been associated with reduced pregnancy-related mortality. Many state maternal mortality review committees have recommended 12-month postpartum Medicaid coverage as a policy solution to reduce mortality among pregnant and postpartum people.

The details of the bill may change as it goes through the House and Senate, but the Congressional Budget Office released a detailed analysis that gives us a window into how the extended postpartum coverage state option might work.


What would the postpartum coverage extension option do?

The option allows states to submit a Medicaid state plan amendment to receive federal matching funds for an additional 10 months of coverage after the end of the pregnancy in Medicaid and CHIP. States would receive their regular matching rate for the additional months of coverage.

States that take up the Medicaid option to cover pregnant people for the additional 10 month postpartum period must also apply the extended coverage to pregnant people they’ve opted to cover in CHIP. Currently, six states offer coverage to pregnant people in CHIP.

The bill proposes that the option will sunset after five years, though Congress could take additional action to make it permanent. In states that take up the option, extended coverage would begin within about one year after the bill is signed into law.


Who would be covered?

About two million people each year are covered by Medicaid for pregnancy, according to the Congressional Budget Office analysis of the postpartum coverage option. They estimate that after Medicaid pregnancy coverage ends at 60 days postpartum, nearly HALF of all people covered–45 percent–become uninsured. About 30 percent of postpartum people continue to receive comprehensive services from Medicaid, about 30 percent enroll either in employment-based or in marketplace coverage, CBO estimates.

Many pregnant people become uninsured because of the wide gap in Medicaid eligibility levels for those who are pregnant (200% FPL on average) compared with other eligibility groups–138% FPL for Medicaid expansion adults and an average of 45% FPL for parents in Medicaid non-expansion states. (See this chart for the eligibility gaps between pregnancy-related Medicaid and CHIP coverage and other coverage options in each state.)

While the extended postpartum coverage option is an important step forward, there will still be people who become uninsured after 60 days postpartum, depending on their state’s decision on whether to take up the option. CBO estimates that by 2024, about 25 percent of all pregnant people who would be expected to receive postpartum services from Medicaid will live in states that implement the 12-month option.


How much would optional extended postpartum coverage cost?

CBO estimates that the combined federal and state cost to provide 10 additional months of Medicaid coverage would be about $1,500 per person, on average, in 2022. That amount would increase at an average annual rate of about 6 percent over the 2022-2030 period. For postpartum people whose current-law Medicaid services are limited to family planning, CBO estimates that the cost per person would be about $1,100, on average. In total, CBO estimates, the additional months of coverage would increase direct spending for Medicaid by $6.1 billion over the 2021-2030 period, a small portion of the estimated $126 billion in increased spending for the overall bill.

The costs are much the same for extending postpartum coverage in CHIP.  Because only six states extend CHIP coverage to pregnant people, CBO estimates that by 2024, fewer than 1,000 pregnant people would reside in a state that implemented the option. CBO expects that additional months of coverage under CHIP would cost about the same as under Medicaid. On net, CBO estimates, the extended postpartum coverage option would increase direct spending for CHIP by $5 million over the 2021-2030 period.

One other factor is that women who are covered in Medicaid or CHIP for an additional 10 months after the end of their pregnancy would delay enrolling in a Marketplace plan or employer-based plan, which offsets some of the cost of extending Medicaid and CHIP coverage. Marketplace subsidy spending would decline by about $137 million and revenues would increase by about $816 million over the ten-year period.


How does this E&C bill compare with other Medicaid postpartum coverage extension proposals considered recently?

Creating a state plan amendment option that sunsets after five years at the state’s regular FMAP rate is a more limited proposal than we’ve seen proposed in recent months.

In January, the Medicaid and CHIP Payment and Access Commission recommended that Congress require states to cover all people who have pregnancy coverage for a year after the end of the pregnancy, and provide a 100% federal match for the coverage, as a recognition of the importance of the policy particularly for low-income mothers of color, who experience pregnancy and postpartum-related mortality and morbidity at the highest rate of any group.

Last fall, the House passed a bipartisan 12-month extended postpartum coverage option at regular FMAP, but it did not have a five-year sunset. The bill did not make it through the Senate before the end of 2020. The five-year sunset in the E&C bill is likely an undesirable consequence of using the budget reconciliation process to move this policy forward. Under budget reconciliation bills, policies cannot increase deficit spending beyond the 10-year budget window.

Six states have also submitted Medicaid Section 1115 waivers to extend postpartum coverage for at least some pregnant people, and many states are working toward covering additional months of postpartum coverage.


What’s next for the legislation?

The postpartum coverage extension option is just one of dozens of critical COVID relief proposals in the bill, including significant incentives for states to expand Medicaid coverage to all low income adults.

The bill was passed out of the House Energy and Commerce Committee on February 12 and will be marked up by the House Budget Committee today. It will likely be up for a vote on the House floor this week.

Maggie Clark is a former staff member at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.