In August, Marketplace Enrollment Slowed Among Those Losing Medicaid Coverage During Unwinding

As readers of Say Ahhh! know, I have been tracking monthly data (here, 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 August 2023.

In August, another 1.98 million people lost their Medicaid coverage due to the unwinding of the Medicaid continuous coverage protection, of which about 71 percent were for procedural disenrollments and 29 percent were due to a finding of ineligibility.  Separately, CMS reported that about 230,000 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 11.6 percent.

Unfortunately, growth in total marketplace enrollment among those losing Medicaid slowed dramatically.  Compared to total marketplace enrollment among those losing Medicaid in July, August enrollment was only 2.7 percent higher.  Moreover, because the number of Medicaid terminations also grew by nearly 20 percent between July and August, the rate of marketplace enrollment among those disenrolled from Medicaid actually fell to 11.6 percent, compared to 13.6 percent in July.  (Another 32,000 or 1.6 percent enrolled in a Basic Health Plan in New York and Minnesota in August, with nearly all of that BHP enrollment occurring in New York.)  Cumulatively, through August, compared to the 7.5 million people disenrolled from Medicaid, about 822,000 or only 11 percent enrolled in marketplace plans.  (The figure rises to 12.6 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 represents only the outcome of unwinding through August, it indicates that marketplace transitions are still 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 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.  They should also continue to take up more waiver flexibilities to reduce red tape and simplify the enrollment and renewal process.  This includes pausing all Medicaid renewals for children for one year as Kentucky has recently done.  Finally, state Medicaid programs and the federal government should work together to ensure that eligible people who were terminated for procedural reasons are reenrolled in Medicaid 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.