End of the line: Why some New Mexicans may no longer qualify for Medicaid next year

Samuel Perez, 65, received a letter in August warning him he may lose his Medicaid coverage once the federally designated COVID-19 crisis ends. Once a federal infusion of funds runs out, New Mexico Medicaid enrollees will once again have to renew their coverage annually — a requirement suspended during the crisis. (Adolphe Pierre-Louis/Journal)

Copyright © 2022 Albuquerque Journal

Samuel Perez received a letter a couple of months back with some unwelcome news.

The letter, sent from the New Mexico Human Services Department in late August, read in part: "Once the (COVID-19) crisis ends, you may not get Medicaid. Your case may be closed."

For the 65-year-old Albuquerque man, who no longer works due to a litany of health issues, and who has a limited income, the news was shocking. It drove him down a path of uncertainty and anxiety. Questions arose on how – and if he even could – find new health insurance where seeing a doctor, or getting a prescription, was basically free to him.

"Am I going to have to pay out of pocket now if I need to get X-rays?" Perez asked.

Perez didn't know it at the time, but he was far from alone. He's one of up to 100,000 New Mexicans who may no longer qualify for Medicaid next year. That's because the state's Medicaid program is bracing for the end of the federal COVID-19 health emergency – expected to come next year – that will close off additional funding for the state, and restructure eligibility on an annual basis as done in previous years.

That means Medicaid enrollees will have to renew their coverage yearly, something that changed during the federal COVID-19 health emergency when continuous eligibility was enacted.

"A pandemic is kind of a perfect storm for Medicaid programs. It means that you've got a health care crisis," New Mexico Medicaid Director Nicole Comeaux told the Journal. "(This is) going to be what becomes our tidal wave or the unwinding here – when this kind of flexibility that was offered by the federal government to support states and the public at large through the pandemic really comes to an end."

The upshot

When the COVID-19 pandemic hit and people lost their jobs the state saw about a 20% increase in Medicaid enrollment, Comeaux said.

That boosted the state's number of enrollees in the Medicaid program, which today stands at nearly 987,000. The program is expected to reach more than 1 million by January.

The bump in new enrollees during the pandemic prompted the federal government to increase match rates – the amount of money the federal government matches to state contributions to the program – for state Medicaid programs. For New Mexico, that match rate – which Comeaux said was about $3.50 before the pandemic – increased by 6.2% and has translated to more than $1 billion in aid for the program going back to 2020 and through the end of the health emergency.

The state expects there to be a shortfall when the aid comes to an end, HSD spokeswoman Marina Piña told the Journal, though it's not yet clear how much of a shortfall that will be.

Piña said that federal money will be substituted with state general funds, which will have to be approved by state legislators. Piña said as part of the HSD budget request, "Medicaid is requesting full funding for our operational budget."

The federal aid was also tied to a variety of changes in the program outside of continuous eligibility in the program, including the elimination of cost sharing for patients for COVID-19 testing services and treatments such as vaccines and not "implementing more restrictive eligibility standards or higher premiums than those in place as of January 1, 2020," Piña said.

But who exactly will lose coverage when the federal health emergency ultimately does come to an end? Likely those who have gotten jobs since the onset of the COVID-19 pandemic but who haven't gotten onto their employers' plans, Comeaux said. That's because, in certain cases, the income range for the Medicaid program puts them out of range from qualifying for benefits when renewal is once again required on an annual basis.

As an example, a single adult who lost a job at the outset of the pandemic and enrolled in Medicaid during the federal health emergency isn't currently required to provide proof of income every year, as long as the federal health emergency is still in action – even if that person has since been rehired at more than $18,754 a year, the current cutoff level for income-based Medicaid eligibility.

However, once the federal designation – and the continuous coverage that comes with it – goes away, that person will no longer qualify for Medicaid coverage, according to Piña.

What comes next

While it's not clear how soon the extra federal funding might be cut off, New Mexico Human Services Department leaders said they're trying to prepare those who might be affected, like Perez, by sending out notices to Medicaid enrollees warning them of the possible changes. The department started sending out those notices in 2020, Piña said, and has continued to as the federal health emergency kept getting renewed.

"That's how we've been engaging with folks," Comeaux said. "So, for better or worse, they've continued to get this notice that says: 'Your coverage is being extended for 90 days, if and whether public health emergency does eventually end, that might not be the case, please keep engaged with us and keep checking your eligibility status.'"

HSD leaders said they're also seeking to make sure call centers are "appropriately staffed" for the large volume of callers looking to check in on their coverage. The department is also working with other health care stakeholders, such as beWellnm – the state's health insurance exchange.

Collaboration

The partnership between the state's Medicaid program and beWellnm will prove to be key in creating a smooth transition to other health coverages for residents, former beWellnm interim CEO Heather Korbulic told the Journal in October. As the state's health insurance exchange, beWellnm will help those who no longer qualify for Medicaid find other, affordable health insurance coverage, she said.

The first element of that partnership includes technological changes with account transfers, which Korbulic said should help ease the process of sharing the data of people moving from Medicaid to the exchange.

There is also a focus on outreach efforts for beWellnm – something Korbulic said will include postcards, text messages and some direct calls.

"That's important because many people are going to be re-determined and ineligible for Medicaid because they are no longer financially eligible," Korbulic said.

While many New Mexicans are expected to lose their coverage – between 85,000 and 100,000 – the state is still poised to have a large Medicaid program, as it typically has in years past.

Comeaux said some of that is likely due to New Mexico's labor force participation rate which, in October, stood at 56.1% – lower than the national average of 62.2%. The labor force participation rate measures the number of working-aged people who are actively working or looking for work.

"The unemployment rate is down, and that's great news for the state," Comeaux said. "But the workforce participation has not gotten back up to where it was pre-pandemic. And that is what is resulting in the continued growth in the Medicaid program that I don't think any of us really predicted."

While the state's Medicaid program is likely to remain relatively large in comparison to the state's overall population – nearly half of New Mexico residents are on Medicaid – the loss of federal aid will likely mean new coverage for many New Mexicans.

That may be the case for Perez.

"They're sending a rocket to the moon," Perez said. "... But yet, they cut away stuff like this for people like me that have paid into Social Security over the years."

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