CBO Issues New Baseline Estimates on Child Enrollment Impact of Medicaid Unwinding

The Congressional Budget Office (CBO) recently issued its June 2024 Medicaid baseline. According to CBO, total average monthly Medicaid enrollment (including both those receiving full benefits and those receiving partial benefits) is expected to fall by 18 million — or 18.6 percent — between federal fiscal years 2023 and 2025. Children’s enrollment in Medicaid is projected to decline by 6 million — from 37 million in 2023 to 31 million in 2025 — accounting for one-third of the total Medicaid enrollment losses. (CBO has separately issued June 2024 baseline coverage estimates finding that average monthly Medicaid enrollment of children with only full benefits is projected to decline by 4.6 million over the same period.)

The CBO Medicaid baseline estimates are generally consistent with the latest administrative Medicaid enrollment data which show that net child Medicaid enrollment has already fallen by 5.1 million since unwinding began. As one would expect, CBO has written that the significant reduction in Medicaid enrollment is largely driven by unwinding of the temporary pandemic-related Medicaid continuous coverage requirement.

While CBO has not provided an estimate of the resulting increase in the number of uninsured children, it has indicated that after an historic low in 2023, the overall number of the uninsured is expected to increase by 3 million between 2023 and 2025, and rise by another 4.6 million between 2025 and 2027 with the scheduled expiration of the enhanced marketplace subsidies after the end of calendar year 2025.

CBO also emphasized that a substantial percentage of uninsured people are eligible for, but remain unenrolled in, Medicaid, subsidized marketplace coverage and employer-based plans. It is very likely that many of those losing Medicaid during the unwinding, especially children, remain eligible for Medicaid. That is because the share of total unwinding Medicaid disenrollments that are procedural terminations remains very high — 69 percent overall according to our latest unwinding data. (Notably, in its Children’s Health Insurance Program (CHIP) June 2024 baseline, CBO also projects no change in child CHIP enrollment, which remains flat at 7 million between 2023 and 2025, even though one would expect CHIP enrollment to rise as children previously enrolled in Medicaid are determined ineligible but found to be income eligible for CHIP. This is likely due to the high rates of procedural disenrollments during the unwinding. Children losing Medicaid for procedural reasons, rather than being determined to be ineligible, would not be automatically transferred to separate state CHIP programs if income-eligible for CHIP.)

However, as my Georgetown University Center on Health Insurance Reforms colleague Sabrina Corlette has written, these CBO baseline estimates are not destiny and policymakers could mitigate or avoid a substantial portion of these expected Medicaid disenrollments and resulting coverage losses. CBO notes that the requirement that all states adopt 12-months continuous eligibility in Medicaid and CHIP in all states starting January 1, 2024 and finalized regulations from the Centers for Medicare and Medicaid Services (CMS) that streamline eligibility and enrollment will modestly increase Medicaid enrollment over the next decade and offset some of the enrollment losses once unwinding is completed. In other words, adoption of additional policies that make it easier for more individuals and families to apply for, enroll in and stay enrolled in Medicaid could increase Medicaid enrollment, relative to what CBO now projects in its baseline, and could therefore lower the number and rate of the uninsured below what is expected under the CBO baseline.

Such policies, for example, could include more states taking up multi-year continuous eligibility for children, which an increasing number of states are adopting. State Medicaid programs can also continue to improve ex parte renewal requirements. They can reduce application backlogs and better ensure that applications are processed on a timely basis, including applications for re-enrollment among those who remained eligible but were disenrolled for procedural reasons during unwinding. States and the federal government can also work together on robust outreach and enrollment efforts in 2024, including preparing for back to school campaigns and other outreach efforts in advance of the next marketplace Open Enrollment Period, in order to target eligible children, as well as parents and other adults, who were disenrolled for procedural reasons so they can be 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.