Insurers to Drive Medicaid Customers to Obamacare as Covid Eases

Insurers hope to soften the financial hit from the expected end of the Covid-19 health emergency next year by steering some of their departing Medicaid enrollees into their individual marketplace plans.

Doing so will give carriers like UnitedHealthcare, Aetna CVS Health, and Ambetter Health, Centene Corp.‘s marketplace provider, an opportunity to retain billions of dollars in revenue that would otherwise disappear. That’s because millions of their Medicaid managed care enrollees will no longer qualify for Medicaid once the public health emergency is lifted and the federal requirement for continuous Medicaid enrollment ends.

That continuous coverage provision, included in the Families First Coronavirus Response Act, requires states to retain all their Medicaid enrollees until the end of the month that the Covid emergency is lifted.

Once the emergency ends—which could happen as early as April 2023—about 15 million people are expected to lose Medicaid coverage, according to Health and Human Services Department estimates. That includes about 6.8 million who will “churn” in and out of Medicaid eligibility, and 8.2 million others who’ll likely exceed program income limits over the long term.

Of these 8.2 million former enrollees, the HHS expects nearly one-third, or 2.7 million, to qualify for marketplace premium subsidies, courtesy of the Inflation Reduction Act. About 1.7 million of them will likely get coverage with no monthly premiums, the HHS estimates. States will get at least 60 days’ advance notice before the public health emergency (PHE) is lifted.

Helping Offset Expected Losses

UnitedHealth offers both marketplace coverage and Medicaid managed care plans in 18 states in 2022. It will expand its Affordable Care Act coverage in 2023 to four additional states where it also offers Medicaid plans: Kansas, Mississippi, Missouri, and Ohio.

Finding new coverage for ineligible Medicaid enrollees and re-certifying program eligibility for others “will require many people to seek new coverage over the next two years and our focus is on ensuring as many people as possible maintain access to coverage,” said a statement from Urko Lapedriza, a UnitedHealthcare spokesperson.

While UnitedHealthcare could face an estimated loss of $4.5 billion in Medicaid revenue when ineligible beneficiaries leave the program after the Covid emergency ends, “they could offset roughly $1 billion,” in revenue loss “through ACA exchange enrollment,” said Duane Wright, a senior research analyst at Bloomberg Intelligence.

Ambetter Health could face an $8 billion loss in Medicaid revenue after ineligible beneficiaries are disenrolled post-PHE, Wright said. But if 25% of them were moved into the company’s ACA plans, the company could bring in about $3 billion in new marketplace revenue, Wright estimated.

And Elevance Health, which has a Medicaid presence in 25 states and an overlapping ACA footprint in 11 of those states, could see a roughly $7 billion revenue hit when its Medicaid rolls decline after the Covid emergency, Wright said.

But the company could offset about 10% of that expected decline by enrolling 25% of their former Medicaid members into marketplace plans, Wright said.

A Difficult Transition

Facing billions of dollars in lost Medicaid revenue after the PHE, insurers want to roll their subsidy-eligible Medicaid alumni into low-cost marketplace plans as soon as possible. But making that transition has never been easy.

Only about 3% of adults who lost Medicaid coverage in 2018 enrolled in a marketplace plan within the next year, the Medicaid and CHIP Payment and Access Commission recently reported.

“A lot of the beneficiaries may not know that their coverage is in jeopardy or that they will no longer qualify” for Medicaid, Wright said.

Next year, Aetna CVS Health will expand its marketplace coverage to four states, including California, Illinois, and New Jersey, where it currently offers Medicaid managed care plans.

The company said it looks at a variety of factors when determining where to expand its marketplace presence, including network strength, the regulatory environment, opportunity for membership growth, and the Medicaid landscape.

Wright said Aetna CVS Health could keep potential losses to roughly $1 billion by enrolling Medicaid beneficiaries that lose coverage into an ACA plan.

“We’re collaborating with Medicaid state agencies to help people maintain health coverage after the public health emergency ends. This includes educating members on their options, such as transitioning to a plan on a health insurance marketplace, if they are no longer eligible for Medicaid,” said a statement from Anand Shukla, senior vice president for individual and family plans at Aetna, a CVS Health company.

In addition, Wright said Aetna CVS Health, Elevance, and UnitedHealthcare should benefit as some of their former Medicaid enrollees move into their employer-sponsored coverage plans.

Recertifying eligibility for Medicaid beneficiaries once the PHE ends, and moving ineligible enrollees into new coverage when the continuous coverage provision expires will both be key in retaining the nation’s record-low uninsured rate of 8% in the first quarter of 2022. Medicaid enrollment grew by roughly 17% from 71.2 million at the start of the pandemic in February 2020 to nearly 83.5 million as of August 2022, federal data show.