Millions of Americans are at risk of losing health coverage when pandemic-era protections are peeled back. Yet one-third of those estimated to lose coverage – nearly 3 million adults – may still have access to subsidized coverage through the Affordable Care Act marketplace.
The impending rollback will test the strategies of insurers who have made offering marketplace plans a key piece of their business model to insure low-income Americans.
The question is whether insurers will be able to shift Medicaid members who lose coverage to subsidized marketplace plans.
The link between Medicaid and the marketplace “will soon be put to a real-world test when millions face the loss of their coverage,” according to a recent report from the Robert Wood Johnson Foundation.
In 67% of counties, insurers already provide both Medicaid and marketplace plans, according to an RWJF researcher.
From a public health perspective, insurers offering both Medicaid and marketplace plans are expected to fill an important role.
“They’re absolutely critical players in mitigating the potential loss of coverage that is likely to occur,” said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University.
The federal government has barred states from kicking members off Medicaid during the COVID-19 pandemic to ensure Americans did not lose access to coverage. Insurance executives are preparing for redeterminations, a process for determining whether a member is still eligible for Medicaid coverage, to begin this year.
States will need to conduct audits for about 80 million people on the program when the public health emergency ends, according to one estimate.
Still, stakeholders have voiced concerns about how difficult it is to conduct redeterminations and warned an influential advisory board in January that it’s not as simple as flipping a switch.
Another estimate shows that as many as 15 million people could lose Medicaid coverage as a result of the eligibility audits. Of the 8.7 million adults expected to lose coverage, as many as one-third could qualify for subsidized marketplace coverage, a report from the Urban Institute found.
For issuers like Centene and Molina, selling marketplace plans is a way to piggyback off their core Medicaid business by leveraging the same provider networks and offering members a familiar experience.
“It’s a residual market for people that are no longer eligible for Medicaid but still need subsidies to afford health care,” Molina CEO Joe Zubretsky said in April on a call with investors.
Zubretsky said when states resume eligibility checks it should validate the company’s marketplace strategy.
“It’s going to be the proof point that if we can… transfer them into a marketplace product and enjoy their membership for another year or two then its position in the portfolio is validated,” Zubretsky said.
Prior to the arrival of the marketplace in 2014, Medicaid insurers typically did not compete with private insurers like UnitedHealthcare in offering traditional commercial coverage. Instead, Medicaid insurers focused on contracting with state governments to provide coverage to the state’s low-income residents enrolled in Medicaid, according to a previous Urban Institute report.
Together, Centene and Molina cover nearly 20 million Medicaid enrollees, according to recent first quarter enrollment figures. Nearly 87 million were enrolled nationwide in Medicaid and CHIP as of January, according to figures from federal regulators, and Medicaid remains the largest business line by membership for both Centene and Molina.
Enrollees frequently churn on and off Medicaid, and they lose eligibility – and regain it – as their income fluctuates. Medicaid insurers view the marketplace as a way to maintain members who become ineligible for Medicaid coverage.
Insurers like Centene and Molina overlap their Medicaid and marketplace plan footprints in an effort to catch those who might transition.
“For some plans, most notably Centene, there is a high degree of overlap between their Medicaid and Marketplace participation, while for others like Anthem and United Health Group there is far less,” RWJF found.
There is less evidence about how frequently members move between Medicaid and marketplace plans, RWJF said.
“We are doing a study of churn now – so far it seems like there is less churn than we thought especially from Medicaid to Marketplace which is why people are worried about the PHE,” RWJF Senior Policy Adviser Katherine Hempstead told Healthcare Dive.
It’s also unclear whether certain plans want to see an influx of Medicaid to marketplace members above a certain threshold. Earlier this year, Molina said it wanted to trim its marketplace membership after ballooning enrollment lead to adverse selection, picking up sicker members that cut into profitability.
“Plans may have mixed emotions about gaining their Medicaid members in the Marketplace as the PHE unwinds. To the extent that they think the marketplace is getting selected against, this could dim their enthusiasm,” Hempstead said.
As the public health emergency expires, it will be important to proactively reach out to members to help reduce potential coverage losses, experts have said.
Federal regulators are urging states and insurers to work closely with one another time to mitigate potential coverage losses.
In a statement, Centene said, “In the coming months, we will continue to work with our state and federal partners to understand the most current eligibility status of beneficiaries, while helping our members retain or obtain critical health insurance coverage.”