Continuous Medicaid Coverage Set to Expire in January

By Whitney Downard

A “Great Unwinding” of Medicaid coverage could leave hundreds of thousands of Hoosiers without the insurance coverage they continuously kept during the COVID-19 pandemic.

Typically, recipients are up for renewal annually but the federal government waived that requirement in 2020 during the COVID-19 pandemic. States were directed not to kick anyone off of a government insurance program like Medicaid and the federal government spent additional money to cover the costs of having more people in the program.

That spending provision was included in Congress’ first coronavirus relief law that passed in March 2020. For the last two years, the rule has been renewed every 90 days.

But President Joe Biden has indicated that the October renewal could be the nation’s last, meaning that continuous Medicaid coverage could end in January.

This review of the hundreds of thousands Hoosiers on Medicaid, coined the “Great Unwinding” by policymakers, could mean some will abruptly no longer qualify.

The Family and Social Services Administration, which oversees the program, declined to answer specific questions about Indiana’s approach to redetermining coverage for Hoosiers, instead referring to the agency’s post on the topic.

The website urges Hoosiers currently using the program to pre-emptively update their information using the FSSA Benefits portal. FSSA didn’t say how many responses they’ve received.

Though the federal government has given states a year to review their enrollees to determine their eligibility, some state legislatures, such as Arkansas’, have shortened that period to six months.

Officials with FSSA did clarify that the state will take a full year to review, assessing beneficiaries on a rolling basis during the same month when they first began receiving services.

Impact on Hoosiers

According to the September monthly Medicaid enrollment reports, about 2.1 million Hoosiers are currently enrolled. Before the pandemic that was around 1.4 million.

The agency believes that 75% of Hoosiers will remain enrolled.

According to the December 2021 Medicaid forecast, expenditures for the Healthy Indiana Plan (HIP) increased by 12.9% between the 2019 fiscal year and the 2020 fiscal year, from $3.9 billion to $4.4 billion. But between 2020 and 2021, costs ballooned from $4.4 billion to over $6 billion, a 39% increase. Before the pandemic enrollment was at about 400,000 and now is at around 808,000.

HIP is a major Medicaid program in Indiana but Medicaid spending also includes Hoosier Care Connect and Hoosier Healthwise.

According to the 2021 Medicaid forecast – which envisioned an end to the public health emergency in early 2022 — average monthly enrollment for all the programs collectively would drop by more than 200,000 Hoosiers. Because no one has been forced off the rolls since then, this is likely the minimum impact that could be expected in 2023.

Even those numbers projected that HIP costs would remain 50% higher than pre-pandemic totals going forward, which Robert Damler said during a December 2021 budget meeting was due to changes in eligibility, expanded postpartum coverage and national trends.

Damler, an actuary with Milliman contracted by the state, explained that “unwinding” costs would be pushed into the next fiscal year after the emergency declaration’s end due to redetermination. Even if the emergency declaration expired in January of 2022, the expensive redetermination process wouldn’t begin until the summer when federal funds have dried up.

Impact on hospitals, budget

A large portion of state Medicaid costs have been borne by Indiana’s healthcare entities, primarily through the Hospital Assessment Fee (HAF).

The Indiana Hospital Association reported that hospitals will pay roughly $467 million in 2022, which combined with $102 million in tobacco taxes funds the entire HIP program. Though a decrease from the previous year, experts say Medicaid coverage costs will rise over the next few years due to the higher enrollment levels and a dropoff in federal funding.

The Medicaid forecast from 2021, which will be updated next month, projected that HAFs would increase to $660 million next year and $730 million the year after that.

Hospitals have previously warned that inflation, combined with staff shortages, have caused their expenditures to increase. Combined with higher assessment fees, healthcare providers could feel the pinch.

“We want people covered… but it has increased the financial burden for hospitals that are funding almost the entirety of that program,” Brian Tabor, the president of the Indiana Hospital Association said. “I think going into the pandemic, no one could have anticipated we would have that many Hoosiers on the program.”

FSSA didn’t respond to questions about how the increased costs would impact their budget planning process for 2023. Lawmakers will draft the state’s two-year budget in the next legislative session, set to begin in January.

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