Unraveling Medicaid doomsday narrative

New data reveal unwinding pandemic-era Medicaid enrollment policies bested expectations with 2 million fewer uninsured Americans than projected -- far from the doomsday scenario predicted initially. Given these policies' overall costs, inefficiencies and wastefulness, states were right to return integrity to the Medicaid program.

During the pandemic, the federal government covered a larger share of the cost of Medicaid in exchange for retaining all enrollees in the program except in certain limited circumstances. This resulted in millions of ineligible enrollees on the rolls under what is known as continuous coverage.

Once states were allowed to unwind these policies starting in June 2023, concerns were raised about what this would do to insurance coverage for millions of Americans. The Urban Institute predicted this would result in at least 3.8 million Americans going uninsured.

The latest numbers from the Centers for Disease Control and Prevention suggest many Americans landed on their feet after the pandemic unwinding. The data show an increase in the uninsured population of 1.8 million -- less than half of what was projected despite disenrolling 24.8 million people (7 million more people than the Urban Institute anticipated).

Those disenrolled during the unwinding aren't without options. Virtually all will have access to employer-sponsored insurance, children's health insurance programs or heavily subsidized plans in health insurance marketplaces or state exchanges.

Overall, 1% of those disenrolled would not have access to other forms of coverage.

It would be wrong to assume the increase in the uninsured directly correlates with Medicaid unwinding, despite the apparent plausibility. A reduction in health insurance coverage overall -- in private and public enrollment -- suggests confounding variables may be at play.

For one example, the administration restricted so-called "junk," short-term, limited-duration health plans this spring. Previously, these private plans provided coverage for just under one year at a cost more affordable than many exchange plans. Now, they are restricted to a maximum duration of only four months -- leaving millions of Americans uninsured until the next open enrollment period or, in some cases, indefinitely.

Allowing ineligible enrollees to remain on Medicaid is not a workable solution to cover the shortcomings of an over-regulated health insurance market. Continuous coverage costs $81.7 billion annually in Medicaid spending. This spending robs taxpayers of resources that could either be returned to them or to support other priorities like education, transportation and public safety.

Many states -- particularly those with expeditious removals -- are receiving criticism for the high number of "procedural disenrollments." These disenrollments generally include enrollees who could not be contacted by state Medicaid administrators or failed to complete the required paperwork for redetermination.

Though there are undoubtedly examples of those who were improperly disenrolled for procedural reasons, these are the exceptions. It is more likely that those who did not turn in their paperwork knew they would be ineligible, choosing not to waste time going through the bureaucracy to reach the same conclusion.

Retaining people on Medicaid who shouldn't be in the program is also a boon for health insurance companies. These corporations receive monthly per-member, per-month payments through managed care arrangements. Those on the rolls may have moved on to other, private forms of coverage after regaining employment post-pandemic, but states could not remove them. The insurance companies were still paid for these enrollees even if they didn't use their benefits.

State experiences back this up. Florida noted that most disenrolled for procedural reasons had dormant benefits for more than one year. Recent studies suggest that many on the Medicaid rolls don't even know it. This is not only a clear waste of taxpayer dollars but fails to benefit those enrollees.

Leaving ineligible enrollees on Medicaid is irresponsible and wasteful. Calls to avoid removals to prevent a crisis of uninsured Americans were largely unfounded. Medicaid unwinding is well ahead of projections and seldom leaves enrollees with no options for coverage. Instead, federal restrictions on private health insurance options may be a greater threat to leaving Americans behind.

Those states that expeditiously removed ineligible enrollees from Medicaid should be applauded for minimizing harm to enrollees and taxpayers. Let's ensure the program remains for the truly needy, as originally intended.

Niklas Kleinworth is the policy director at the Idaho Freedom Foundation, a conservative organization. He wrote this for InsideSources.com.