Total Adoption of Continuous Eligibility May Improve Coverage Rates

While Congress has taken steps to ensure continuous eligibility for children on Medicaid, data indicates that expanding continuous eligibility to adults could result in lower uninsurance, some cost savings, and better patient outcomes, according to a Commonwealth Fund issue brief.

“We find that extending 12-month continuous eligibility to adults in all states would meaningfully increase Medicaid enrollment and reduce the number of people without health insurance,” the researchers explained.

“Some recent state waivers extend continuous eligibility to 24 months; we find that this would have a little less than twice the impact of 12-month continuous eligibility on coverage and government spending.”

The researchers used Urban Institute’s Health Insurance Policy Simulation Model to predict what would occur if all states adopted a year to two-year continuous eligibility policy for adult Medicaid beneficiaries.

An additional 450,000 adults—or 1.3 percent more beneficiaries—would be enrolled in Medicaid on a monthly basis if all states enacted continuous eligibility.

Uninsurance would drop, both in the monthly average of uninsured individuals and the overall uninsured population. The monthly average of uninsured individuals would decrease by 267,000.

Most of the individuals who would gain insurance under the 12-month eligibility policy are currently uninsured. Another 145,000 of them are covered under employer-sponsored health insurance.

Coverage rates would be even higher on a monthly basis with 24-month continuous eligibility. On average, 823,000 more adults would be enrolled in Medicaid each month and 487,000 fewer people would be uninsured in an average month.

More beneficiaries relying on public health insurance would increase costs for the federal and state governments. Federal spending would rise by $479 million on acute care for nonelderly beneficiaries, while state expenditures would jump $158 million. The higher amount of federal spending represents a 0.1 percent increase in acute care for nonelderly beneficiaries.

However, total spending would drop and spending for households and employers would also decline. Total healthcare spending—which CMS projected would reach $4.4 trillion in 2022—would decline by $1.8 billion in 2024.

Meanwhile, employers and households would save $1 billion annually. Employer spending on premium contributions would decline by $1.1 billion. These savings are higher under the 24-month continuous eligibility policy.

Medicaid administrative costs would drop $87 million. Federal spending on marketplace premium tax credits would decrease by $134 million and the cost of uncompensated care would decline by $189 million.

States would save $51 million on administrative costs and state and local governments would save $118 million on uncompensated care.

The researchers noted some critical limitations in their work. First, state-specific enrollment rates will vary and those variations are hard to capture. Additionally, some individuals are uninsured for only part of a year. And the comparison does not account for changes states may make to their policies in the coming year.

The coronavirus pandemic provided a testing ground for these policies. Separate research has found that coverage among children swelled during the pandemic due to the Families First Coronavirus Response Act (FFCRA) which mandated continuous coverage for children.

However, the end of the public health emergency and the return of pre-pandemic policies have disrupted some of the coverage gains that the country experienced during COVID-19.