Marketplace Enrollment Rises Again in July But Still Represents Only Small Share of Those Losing Medicaid Coverage During Unwinding

As readers of Say Ahhh! know, I have been tracking monthly data (here, here, and here) from the Centers for Medicare and Medicaid Services (CMS) on the number of people who were either previously enrolled in Medicaid or had experienced a denial or termination who then selected a marketplace plan.  CMS has just issued new data for July 2023.

In July, another 1.65 million people lost their Medicaid coverage due to unwinding of the Medicaid continuous coverage protection, of which 71 percent were for procedural disenrollments and 29 percent were due to a finding of ineligibility.  Separately, CMS reported that about 224,000 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 constituted only about 13.6 percent.

While total marketplace enrollment among those losing Medicaid increased substantially (an increase of 26 percent from June) and the rate of marketplace enrollment among those disenrolled from Medicaid was higher than prior months (13.6 percent compared to 10.7 percent in June), marketplace enrollment still represented only a small share of those losing Medicaid coverage.  (Another 32,000 or 1.9 percent enrolled in a Basic Health Plan in New York and Minnesota in June, with nearly all of that BHP enrollment occurring in New York.)  Cumulatively, through July, compared to the 5.5 million people disenrolled from Medicaid, about 578,000 or only 10.5 percent enrolled in marketplace plans.  (The figure rises to 12 percent if including Basic Health Plan enrollment.)

As each of the blogs about previous CMS data releases noted, 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.  While this data remains early, it indicates that marketplace transitions may still have been falling short of the expected pace in July.  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 relatively modest number of people, especially children, who lose their Medicaid coverage during unwinding.  Instead, it’s critical for state Medicaid programs to reduce the persistently high rates of procedural terminations for children, parents and other adults, most of whom are likely to remain eligible for Medicaid.  This includes states continuing to implement fixes to major problems in how they are conducting ex parte renewals for children and reinstating those who have improperly lost their Medicaid coverage as a result.  States should also pause procedural terminations as other unwinding problems arise and continue to take up more waiver flexibilities to reduce red tape and simplify the enrollment and renewal process.  Finally, state Medicaid programs and the federal government should work together to ensure that eligible people who were terminated for procedural reasons have their Medicaid coverage reinstated as quickly as possible.

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