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[MM Curator Summary]: There may be 5M people who have insurance from their job- but are being used by MCOs to bill Medicaid cap rates.
Thanks to pandemic-era policies, taxpayers foot the bill for some five million people who have enrolled in employer plans.
American taxpayers have been sending more than $6 billion a month to insurance companies for services provided under Medicaid to people who are ineligible—often because they’re enrolled in a private health plan. The Biden administration is pushing the boundaries of law and credulity by pressuring states to continue making these payments to insurers.
Medicaid is a joint federal-state welfare program originally intended to finance healthcare for the needy, but it has expanded significantly in recent decades. Federal Covid-19 policies caused enrollment to surge by about 20 million as states stopped reviewing enrollees’ eligibility when the pandemic hit. Many enrollees are now ineligible. They now make too much money, have access to employer coverage, have moved out of state or have died. They should be removed from Medicaid.
As states begin eligibility redeterminations and removals of ineligible enrollees, left-leaning media is attempting to delegitimize these state efforts by claiming anyone who is disenrolled for failing to respond to a renewal application is having his coverage taken away for “procedural” reasons. This is misleading, even deceitful.
Someone who is ineligible because he has other coverage or income well above eligibility thresholds is unlikely to make the effort to return a renewal application. This includes roughly five million people now dually enrolled in an employer plan and Medicaid, as per the Congressional Budget Office. Most of the incentives in the system are biased toward continued enrollment, particularly those for insurers, which want to maintain enrollment to keep the checks from the government flowing.
No one wants eligible Medicaid enrollees to lose coverage. But if they do, they’re still effectively covered. Medicaid-eligible recipients can go to the hospital, enroll on site when they need services and have the government pay expenses incurred, typically for the previous three months too.
The common characteristic of Medicaid enrollees is low income. But low incomes are often temporary as people gain new or improved employment, which leads to health insurance benefits and higher wages. Thus, frequent eligibility reviews are important.
During the pandemic, Congress was concerned that people would lose their jobs and health insurance and that states would need money to cope with the economic shutdowns. In March 2020, Congress passed legislation that offered states additional federal money if they refrained from taking steps to remove ineligible Medicaid enrollees from the program during the public-health emergency.
The Biden administration dragged out the emergency and the removal ban, despite an improved economy. Meantime, the number of ineligible Medicaid enrollees rose each month. In December 2022, Congress forced the administration’s hand by enacting legislation that phases out the extra federal money and permitted states to begin removing ineligible Medicaid enrollees in April. (President Biden finally ended the public-health emergency in May.)
The Urban Institute estimated that 18 million ineligible enrollees were in Medicaid in April. Most were in households that were temporarily poor during the pandemic while many businesses were shuttered and unemployment spiked. Most of the 18 million ineligible enrollees will likely enroll in an employer plan after they are removed from Medicaid. Most of the rest will enroll in a different government subsidized plan.
States have taken different approaches to Medicaid redeterminations. Some started earlier and focused on people most likely to be ineligible. Others started slowly. As a result, there is wide variation in disenrollment rates across reporting states. But all states have made efforts to update enrollees’ information and to use different methods to contact them. So far, more than four million people have been removed from Medicaid since April.
Removing people from welfare who aren’t eligible or who don’t provide evidence of eligibility after years without scrutiny is prudent governance. Spending on ineligible Medicaid enrollees means less state money for eligible enrollees and for other priorities, such as education. It also means higher federal deficits. The country can’t afford a permanent Medicaid Covid expansion, and the program is already too large to serve those who are eligible. It’s vital for the country that states return the program as quickly as possible to only those who are eligible.
Mr. Blase, who served as a special assistant to President Trump at the National Economic Council, is president of Paragon Health Institute.
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