Millions of Children on Medicaid at Risk of Losing Coverage

More than 6.7 million children are at risk of losing insurance coverage once pandemic-era restrictions on Medicaid income eligibility checks are lifted on April 1, according to a report by the Georgetown Center for Children and Families.

Legislation enacted early in the pandemic in 2020 temporarily increased federal funding for state Medicaid programs under the condition that states continuously cover beneficiaries until the end of the public health emergency. The ranks of Medicaid beneficiaries grew by nearly 20 million people as the program acted as a health insurance safety net. However, the Consolidated Appropriations Act of 2023 slowly unwinds the federal continuous coverage requirement through May 2024, allowing states to start eligibility redeterminations next month for all 83.5 million Medicaid beneficiaries—including more than 34.2 million children.

To protect children in low-income families, the Consolidated Appropriations Act requires states to provide 12 months of continuous Medicaid and Children’s Health Insurance Program eligibility to children under 19 beginning Jan. 1, 2024, if they don’t already do so. Most states have some form of continuous eligibility for children to protect them from losing coverage during redeterminations of their parents’ eligibility, but 17 states and the District of Columbia do not have such a provision, the Georgetown center found.

Redeterminations require beneficiaries to reapply for health insurance, verifying their income and ensuring that they meet all the other eligibility criteria to continue to receive benefits. However, the process can be complicated and take up to 14 months, and families who fail to complete it on time may lose coverage.

The impact of redeterminations on children’s health-care access concerns many Medicaid stakeholders across the country. Eligibility checks have traditionally caused coverage losses due to bureaucratic roadblocks, said Jennifer Wagner, director of Medicaid eligibility and enrollment at the Center on Budget and Policy Priorities, a nonpartisan research and policy institute.

“Historically, we lose a lot of people during the renewal. Recipients are often sent a form by mail to the last known address, which may have changed. Some people might not get the notice they got a renewal in the mail. Others might not act timely because they have very complex situations and may not respond in time. Some might not even understand the notices that they are getting. They’re historically very confusing,” she said.

Public policy advocates also fear that chronic staffing shortages will cause state Medicaid agencies to face backlogs in processing redetermination applications, leading to more unintended policy cancellations.

A survey by the National Association of Medicaid Directors found that over a fifth of all state Medicaid agencies have job vacancy rates of over 20%, with some states seeing up to 40%.

The problem is nationwide, even in well-funded states like California, which invested $146 million into its unwinding strategy, stakeholders say. California has done little to rectify the chronic shortages in front-line Medicaid workers in its 58 counties, David Kane, senior attorney at the Western Center of Law & Poverty, said.

“We’re very concerned that the state doesn’t have the basic resources they need to do this. We are at record high medical caseload, but counties are not even fully staffed at levels that they had back before the pandemic,” Kane said.

Easing the Burden

With so many obstacles facing Medicaid beneficiaries during the upcoming eligibility checks, millions of children are bound to slip through the cracks, experts say. The Georgetown center projects that nearly 72% of Medicaid-eligible children who lose coverage will lose it due to procedural shortcomings.

The easiest thing understaffed Medicaid agencies can do to ensure that families don’t lose coverage unnecessarily is to remove the need for beneficiaries to fill out paperwork, and conduct renewals automatically, Wagner said.

“Under Medicaid, you can do an ex parte renewal by checking data sources. And if those data sources confirm ongoing eligibility, you can automatically renew and send a claim in a form that says you’ve been renewed—'Here’s the information we use. If this is correct, you’re good to go. You don’t need to do anything. If not, please contact us.’ And that’s the best way to keep eligible people connected and minimize the burden that they face,” she said.

Daniel Tsai, the deputy administrator and director of the Center for Medicaid and CHIP Services at the Centers for Medicare & Medicaid Services, said in an interview with reporters last week, “I think improving ex parte renewal is one of the most impactful things. If you can auto-renew someone because you can match up against IRS or other data, you don’t even need to send them a form. And that’s good for everyone. It’s good for administrative staff—you don’t lose people from not getting a piece of mail, and many, other things.”

Even though ex parte renewals increase administrative efficiency by allowing Medicaid agencies to draw from demographic information pulled from programs like the Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families to conduct renewals automatically, the service hasn’t been adopted equally across state Medicaid agencies.

“A bunch of states have challenges with the ability to do an auto-renewal. You have to ping against assets—it’s not just income like the IRS, you have to ping against bank accounts and so on. We have been working with states to mitigate and find other workarounds like using SNAP eligibility as a proxy to help reenroll folks,” Tsai said.

In some states, up to 75% to 90% of renewals are conducted on an ex parte basis; in other states, including Texas and Missouri, fewer than 25% of renewals are conducted automatically, according to data compiled by the Georgetown center and the Kaiser Family Foundation.

In Texas, ex parte renewal rates have been set artificially low, according to Stacey Pogue, a senior policy analyst at the advocacy group Every Texan. “The reason why we have really low automatic renewal rates is that the state has limits on using data that’s more than a couple of months old.”

“The main income source for Texas Medicaid has been the Texas Workforce Commission’s quarterly wage data. The quarterly wage data only gets updated every three months, and the policy for Medicaid is if it’s more than two months old, they won’t use it, Pogue said.

For the state’s nearly 4.3 million children on Medicaid, the restrictions on ex parte renewals will mean added roadblocks for families looking to keep their children insured.

“The agency sends one mailed notice, and one text message if you’ve indicated that you’ll accept electronic communications. That’s it,” Pogue said.

To address these concerns, Texas has conceded some policy changes to simplify the redetermination process and reduce barriers for families. The state will allow data collected from SNAP applications up to six months old to be used to determine eligibility, Pogue said. Texas has also lowered the amount of income eligibility checks it will conduct on children.

“Before if you had a kid on Medicaid, their income would be checked four times during the middle of the year. The last legislative session was able to get those income eligibility checks in the middle of the year down to one,” she said.

A Lifeline for Children

Medicaid continuous coverage provisions will be particularly important for children, who are more likely than adults to experience changes in circumstances that could affect their eligibility for Medicaid, according to Joan Alker, director of the Georgetown center.

“Continuous eligibility ensures that children and their families don’t face a gap in coverage that can lead to large medical bills and debt. Because children are expensive to cover, they do frequently have situations where they need to go to the emergency room. And of course, one visit to the emergency room can set a family back for years really with all kinds of medical debt,” said Alker.

Some state continuous coverage provisions require redeterminations only once a year, instead of every six months or quarterly. This means that children enrolled in Medicaid can continue to receive coverage even if their family’s income increases above the eligibility threshold during the year. Some provisions also require states to use electronic data sources to verify information.

Alker urges states without continuous coverage to adopt such protections before the Biden administration’s January 2024 deadline.

“Immediately implementing this provision for all children as unwinding takes place would be highly beneficial for children; otherwise, there will likely be a gap in coverage before this provision becomes effective,” Alker said.

As of February 2023, 24 states including California, New Mexico, and Louisiana have introduced 12 months of continuous coverage for Medicaid and CHIP beneficiaries under 19.

Oregon introduced the nation’s most robust continuous eligibility provision through a Section 1115 waiver filed last year. The state offers multiyear continuous eligibility for children up to 6 years of age and two years of continuous eligibility for children age 6 and older.