Update on Medicaid Unwinding and Marketplace Enrollment

I previously reported that according to data from the Centers for Medicare and Medicaid Services (CMS), of the 715,000 Medicaid beneficiaries who lost Medicaid coverage in April due to unwinding of the Medicaid continuous coverage protection, a total of about 54,000 people or 7.5 percent — who were either previously enrolled in Medicaid in March 2023 in federal marketplace states or had experienced a denial or termination in state-based marketplace states —  selected a marketplace plan in April.

At the end of August, CMS issued Medicaid renewal outcome data and marketplace enrollment data for May.  The data remains unpromising.  In May, about 1.5 million Medicaid beneficiaries lost their coverage — of which 77 percent were for procedural terminations and 23 percent were due to a finding of ineligibility.  Separately, CMS reported that 124,000 people who were either previously enrolled in Medicaid in federal marketplace states or had experienced a denial or termination in state-based marketplace states selected a marketplace plan in the same month.  That was still only 8.3 percent.  (Another 22,500 or 1.5 percent enrolled in a Basic Health Plan, all in New York.)

As I similarly wrote about the April data, to provide context to these figures, last year, federal researchers projected that of the 15 million people expected to lose Medicaid during the unwinding, nearly 2.7 million people — or about 18 percent —would be eligible for subsidized marketplace coverage.  So while this data remains early, it indicates that marketplace transitions are falling short of the expected pace.  It is also important to note that CMS determined that only 4 percent of people leaving Medicaid and CHIP in 2018-2019 in federal marketplace states subsequently enrolled in marketplace plans.  And of course, for children losing Medicaid, even with the enhanced marketplace subsidies, children accounted for only about 9 percent — or 1.55 million — of total marketplace enrollees during the 2023 Open Enrollment Period.

Marketplace plans will be a valuable source of affordable, comprehensive health coverage but only for a modest number of people, especially children, who lose their Medicaid coverage during unwinding.  Instead, as we have repeatedly written, it’s critical for state Medicaid programs to reduce the high rates of procedural terminations for children, parents and other adults, most of whom are likely to remain eligible for Medicaid.  This includes states promptly fixing major problems in how they are conducting ex parte renewals for children and immediately reinstating those who have improperly lost their Medicaid coverage as a result.  It also includes state Medicaid programs and the federal government working together to ensure that eligible people who were terminated for procedural reasons are reenrolled in Medicaid as quickly as possible.

[Editor’s Note: This is the 43rd blog in the Unwinding Wednesday series. For more information, visit our Unwinding resource page where you’ll find other blogs in this series, reports, webinars and the 50-state tracker.]

Edwin Park is a Research Professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.