Unraveling the Effects: The Impact of Medicaid Unwinding on U.S. Health Care Markets

The unwinding of Medicaid, initiated one year ago, marks a significant shift in the U.S. health care landscape, with extensive ramifications for markets and the millions previously covered by the program. This article draws on insights from a recent webinar by the American Academy of Actuaries and additional analysis by KFF experts to explore the ongoing effects and future implications of this unwinding process.

Background of Medicaid Unwinding

During the COVID-19 pandemic, a federal mandate prevented states from removing individuals from Medicaid, thus ensuring continuous coverage while also increasing federal financial contributions. However, the Consolidated Appropriations Act, passed in December 2022, set an end date to this provision on March 31, 2023, with a phased reduction of enhanced federal matching payments extending to the end of the year. States began the process of disenrollment in April 2023, following mandatory renewal assessments as per federal regulations.

Current Status of Enrollment and Disenrollment

As of April 2023, Medicaid enrollment peaked at 94 million but saw a steady decline to 85 million by the end of the year. The reduction largely stems from the disenrollment of over 19 million individuals, with procedural reasons accounting for 70% of these cases. Jennifer Tolbert of KFF’s Program on Medicaid and the Uninsured emphasizes that many of these disenrollments could be due to failures in receiving renewal notices or inability to meet the documentation requirements in time.

Implications for the Uninsured and Health Care Access

Approximately 28% of those removed from Medicaid have transitioned to health plans available through the Affordable Care Act marketplace. Despite this shift, a significant number remain uninsured. This gap highlights the critical need for robust systems to support and inform individuals about their health care options, especially those inadvertently affected by procedural hurdles.

Actuarial Considerations and Market Impact

Colby Schaeffer from the American Academy of Actuaries’ Medicaid Committee points out that the changing demographics and enrollment figures bring forth new challenges for actuaries. These include varying risk profiles and health care usage patterns among Medicaid enrollees during and after the public health emergency (PHE). The removal of non-utilizers and those with other health insurance during eligibility redeterminations is expected to result in higher per capita costs due to a concentrated risk pool.

Looking Forward: Strategic and Policy Implications

The ongoing analysis raises essential questions about the characteristics and needs of those disenrolled from Medicaid. Identifying effective strategies to reduce procedural disenrollments and manage churn—where individuals cycle in and out of Medicaid coverage—is crucial for stabilizing the health care market.

Furthermore, understanding how the unwinding affects overall enrollment and uninsured rates will inform future policy decisions. These insights are imperative for designing interventions that ensure continuous and accessible health care coverage for the most vulnerable populations.

Conclusion

As Medicaid unwinding progresses, it is clear that its impact extends beyond individual enrollees, influencing broader market dynamics and public health outcomes. Stakeholders, including policymakers, health care providers, and insurers, must collaborate to address the challenges presented by this transition and mitigate its adverse effects on public health and economic stability.