Fiscal and Enrollment Implications of Medicaid Continuous Coverage Requirement During and After the PHE Ends

Early in the pandemic, Congress passed the Families First Coronavirus Response Act (FFCRA), which authorized a 6.2 percentage point increase in the federal Medicaid match rate (“FMAP”) for states that meet certain “maintenance of eligibility” (MOE) requirements, with the goal of providing broad fiscal relief to states while preventing coverage losses during the pandemic. The additional funds were retroactively available to states beginning January 1, 2020 and continue through the quarter in which the Public Health Emergency (PHE) period ends. The MOE, which includes a requirement that Medicaid programs keep people continuously enrolled, expires at the end of the month in which the PHE ends.

The end date of the PHE, most recently extended to mid-July 2022, will have significant implications for Medicaid enrollment and spending. If the PHE is not once again extended, the continuous enrollment requirement will end August 1, 2022 and the enhanced FMAP will conclude at the end of the quarter (September 30, 2022 or the end of federal FY 2022). However, the Biden Administration has said that it will give states a 60-day notice before the PHE expires. If states are not notified by mid-May, the PHE will likely be extended further.

This analysis projects enrollment growth through the end of FY 2022. It examines how much of the enrollment growth can be attributed to baseline, or expected enrollment increases without the pandemic, and how much to the MOE continuous enrollment requirement during the PHE. We explore the costs tied to MOE enrollment growth, estimate how much fiscal relief was provided to states through the enhanced FMAP, and describe scenarios for enrollment going forward. We present findings and describe how estimates were developed throughout the text as well as provide more detail on data sources and specific calculations in the methods box below. We also provide a supporting state level table in the Appendix. Key findings include the following:

  • We estimate Medicaid enrollment will grow by 25% from 2019 through the end of FY 2022, representing an increase of 22.2 million enrollees. Baseline growth accounts for approximately 3.5 million of the enrollment growth while the MOE continuous enrollment requirement accounts for 18.7 million. Of the total increase in enrollment (22.2 million), children accounted for an estimated 42%, expansion adults 33%, other adults 20% and the aged and people with disabilities accounted for 6%.
  • Over the three-year period from FY 2020 through FY 2022, we estimate that states will have received approximately $100.4 billion in fiscal relief due to the enhanced FMAP, which is more than double the total estimated state costs due to the additional MOE enrollees ($47.2 billion). The enhanced federal matching payments — which were intended to provide states with fiscal relief — exceed the costs of the additional enrollment in every state, though the degree varies by state.
  • The number of Medicaid enrollees disenrolled in FY 2023 — assuming the continuous enrollment requirement ends August 1 — will likely vary by state and eligibility group. Based on illustrative scenarios, we project enrollment losses in FY 2023 could range from 5.3 million to 14.2 million enrollees, with the largest losses among Affordable Care Act (ACA) expansion adults, other adults such as parents not eligible based on a disability, and children.

How much did enrollment change due to the pandemic and MOE?

For this analysis, we first estimate baseline enrollment, or expected enrollment growth without the MOE continuous enrollment requirement, for FY 2020 to FY 2022. Then, we estimate total pandemic enrollment growth, which includes baseline growth rates as well as growth rates that account for the MOE continuous enrollment requirement for FY2020 to FY 2022. A recent KFF analysis suggests that the vast majority of current growth is attributable to the continuous coverage requirement, since it is in line with what one would expect when people cannot be disenrolled, given historical rates of enrollment and disenrollment in Medicaid. However, while enrollment is substantially higher than it would otherwise be due to the continuous enrollment requirement, it may still be that many current enrollees are, in fact, still eligible based on their incomes.

We estimate enrollment will increase by 25%, or 22.2 million enrollees, from 2019 to through the end of FY 2022 (Figure 1). For context, the most recently released data from the Centers for Medicare and Medicaid Services (CMS) Performance Indicator Project show Medicaid and Children’s Health Insurance Program (CHIP) enrollment has increased by 15.7 million or 22.1 percent, from February 2020, the start of the pandemic, through January 2022. Medicaid enrollment alone has increased by 15.4 million or 23.9 percent. We project further enrollment growth through September 2022, with enrollment reaching 110.3 million, up 25% from 88.2 million full and partial Medicaid enrollees every enrolled during 2019. Our estimates differ from the CMS performance metric data for several reasons: they are based on T-MSIS data that includes partial benefit enrollees (who are also subject to the MOE continuous coverage requirement), they project beyond January 2022 through the end of FY 2022, and are based on an ever-enrolled calculation throughout the year versus a count of enrollees at the end of each month.

We estimate that baseline enrollment growth, or enrollment growth that was expected prior to the pandemic and MOE, would have been 4% over the period. Out of the projected 22.2 million increase in enrollment by the end of FY 2022, baseline growth accounts for approximately 3.5 million enrollees while the MOE continuous enrollment requirement accounts for approximately 18.7 million. Under the FFCRA, the continuous enrollment requirement went into effect in March 2020 and will stay in place until at least August 2022 – almost through FY 2022 (which ends September 30). While Medicaid enrollment growth also increased during past economic downturns, this was the first time MOE requirements tied to fiscal relief included a continuous enrollment requirement. The MOE continuous eligibility requirement keeps people enrolled in the program irrespective of changes in income and halts churn, which is when individuals temporarily lose Medicaid coverage and disenroll and then re-enroll within a short period of time. Another recent KFF analysis found one in ten Medicaid/CHIP enrollees disenrolled and then re-enrolled within a year.

We estimate that adults, including ACA expansion adults and other adults such as parents who do not qualify for Medicaid based on a disability, account for the largest share (53%) of all new pandemic enrollment growth since 2019 (Figure 2). Children account for 42% of new enrollment growth, while persons with disabilities and seniors each account for 3%. The vast majority of enrollment growth due to the MOE continuous enrollment requirement alone is among ACA expansion adults, other adults, and children. Our MOE enrollment growth rates are based on data from a recent KFF MOE simulation analysis that found higher turn-over (i.e., greater disenrollment and enrollment rates) for children and non-elderly adults compared to people with disabilities and those ages 65 and older. On the other hand, baseline enrollment growth, which accounts for only a modest share of total enrollment growth, was expected to be more varied across eligibility groups, including relatively higher growth for people over age 65 and people with disabilities.

Did federal fiscal relief cover the costs of new enrollment due to the MOE?

We estimate how much Medicaid spending is growing due to enrollment growth from the MOE, over and above what would have otherwise been expected. We assume no net effect of the pandemic and MOE on spending per enrollee since there are factors that may have pushed spending both up and down relative to baseline projections. For example, while Medicaid programs have absorbed costs related COVID-19 testing, treatment, and vaccines, the pandemic also depressed use of other services.

The federal share of Medicaid spending during the pandemic and MOE consisted of the state specific original FMAP values, plus the 6.2 percentage point FMAP increase for all enrollment and eligibility groups, except for the ACA adult expansion group, which has a 90% FMAP (unchanged from prior law). An additional 5 percentage points is included for recent expansion states due to the fiscal incentive for states to newly implement ACA Medicaid expansion authorized by the American Rescue Plan Act (ARPA), which applies to Missouri and Oklahoma.

We estimate that states will have received approximately $100.4 billion in fiscal relief due to the enhanced FMAP, which is more than double the total estimated state costs due to the additional MOE enrollees ($47.2 billion) from FY 2020 – FY 2022 (Figure 3). Under FFCRA, the enhanced FMAP went into effect in January 2020 and will stay in place through at least the end of September 2022 – the entirety of FY 2022. The fiscal relief from the enhanced FMAP was designed to provide fiscal relief to states beyond the costs of increased enrollment levels as states were projecting large revenue declines at the beginning of the pandemic. The enhanced FMAP provided relief to states using an existing federal funding mechanism, which has allowed money to be distributed quickly and freed up state funds for other purposes including the ability to support Medicaid and fill gaps in overall state budget shortfalls.

The fiscal relief exceeds the costs of the additional enrollment in every state, though the degree to which that is the case varies by state (Appendix Table 1). On average, the total expected fiscal relief is 2.3 times the costs of the additional enrollment, ranging from 1.0 in New Hampshire, Nevada, and Oregon to 6.1 in Mississippi. In non-expansion states, the fiscal relief was, on average, 2.9 times the cost of the additional enrollees compared to 2.1 times the cost in expansion states. This difference is likely due to non-expansion states experiencing enrollment growth in traditional eligibility groups to which the enhanced FMAP applies (the enhanced FMAP does not apply to the ACA adult expansion population, where the federal match rate is 90%).

As a result of the fiscal relief, we estimate state Medicaid spending over the entire pandemic period (FY 2020 – FY 2022) will be 6% lower compared to baseline state Medicaid spending without the enhanced FMAP or enrollment growth due to the MOE. In contrast, we estimate federal Medicaid spending over the three-year period will be 19% higher than baseline federal spending without the pandemic federal fiscal relief and continuous enrollment requirement.

What are estimates for scenarios for future enrollment and costs?

The end date of the PHE will have significant implications for Medicaid enrollment and spending. When the continuous enrollment requirements end, states will begin processing redeterminations and renewals. States will largely be responsible for managing the unwinding of the continuous enrollment requirement, which could lead to variation in practices and in how many people are able to maintain Medicaid coverage. Among responding states in a recent KFF survey of state Medicaid directors in the field in February 2022, the median change in Medicaid enrollment was projected to be -5% in state fiscal year 2023 (beginning July 1 in most states) compared to state fiscal year 2022. These projections were based on varied assumptions about the MOE end date as well as other factors that could affect overall enrollment growth (such as disenrollment and re-enrollment over the course of the year). Another recent KFF survey found, among the 20 responding states able to report, that states expect on average about 13% of Medicaid enrollees to be disenrolled following the end of the continuous enrollment requirement (with estimates ranging from 8% to over 30%). This would not account for churn (people reenrolling in Medicaid or other new enrollment), and the disenrollment would likely occur over a period of time. Based on this information, we explore potential enrollment trends for two FY 2023 illustrative scenarios: if total enrollment were to decline by 5% or if total enrollment were to decline by 13% from FY 2022 to FY 2023. Enrollment scenarios are estimated for FY 2023, but declines could continue into subsequent fiscal years depending on the speed at which states process renewals. These are illustrative scenarios, but there could be wide variation across states in enrollment reductions that could be lower or higher than these scenarios.

The number of Medicaid enrollees who may be disenrolled in FY 2023 is highly uncertain, but millions could lose coverage (Figure 4). A 5% decline in total enrollment would translate to the loss of 5.3 million enrollees, while a 13% decline in total enrollment would translate to the loss of 14.2 million enrollees. The groups that experienced the most growth due to the MOE — specifically ACA expansion adults, other adults, and children (Figure 2) — could see the largest losses in enrollment. However, the effects by eligibility group will depend on how states prioritize renewals once the continuous enrollment requirement ends. Additionally, individuals could be at risk of losing coverage even if many continue to be eligible due to barriers navigating the redetermination process.  Efforts to conduct outreach, education and provide enrollment assistance can help ensure that those who remain eligible for Medicaid are able to retain coverage and those who are no longer eligible can transition to other sources of coverage. Without such efforts many could become uninsured.

Total Medicaid spending and state Medicaid spend trends will also be impacted by disenrollment rates during the unwinding of the PHE. While state Medicaid directors expect enrollment to decline substantially in FY 2023 following the end of the PHE and continuous enrollment requirement, they expect total Medicaid spending to increase slightly by 2% due to changes in per enrollee expenses. State Medicaid spending is expected to increase sharply in FY 2023 compared to FY 2022, assuming the public emergency declaration is not renewed. While enrollment would decrease, that effect would likely be swamped by the end of the enhanced federal match.

Looking Ahead

While economic conditions have improved and COVID-19 vaccines are now available for most U.S. residents, uncertainty remains around the trajectory of the pandemic and the duration of the PHE, especially with the rise of a new Omicron subvariant, BA.2. The end date of the PHE, which will last until at least mid-July 2022, will have significant implications for Medicaid enrollment and spending.

Relative to FY 2022, Medicaid enrollment could decline by millions, but state spending could increase substantially with the expiration of the federal fiscal relief, which up until now has more than offset costs of new enrollment for states. When the continuous enrollment requirement ends, states will begin processing redeterminations and renewals. Within parameters set by the Administration, or potentially legislation, states will largely be responsible for managing the unwinding of the continuous enrollment requirement, which could lead to variation in practices and in how many people are able to maintain Medicaid coverage, transition to other coverage or become uninsured.

As this analysis shows, millions of people could lose coverage if they are no longer eligible or face administrative barriers during the process despite remaining eligible, such as individuals with limited English proficiency. As states resume redeterminations, it is likely that there could be a lot of enrollment churn as individuals who may be eligible lose coverage and then re-enroll in a short period of time.  While this analysis presents illustrative scenarios showing the overall Medicaid enrollment effects as the public health emergency unwinds, we are not able to estimate what coverage options, including subsidized ACA marketplace coverage, individuals may be eligible for or take up if they lose Medicaid coverage. If eligible individuals are not able to retain Medicaid or transition to other coverage, many could become uninsured.

Methods
This analysis is based on two estimated models. The first is a baseline model with enrollment and spending estimates for fiscal years (FYs) 2020, 2021, and 2022 to represent expected enrollment and spending growth without MOE continuous enrollment requirement. The second estimates total pandemic enrollment and spending for FYs 2020, 2021, and 2022 by accounting for baseline expected enrollment and spending growth as well as enrollment and spending growth due to the MOE. We do not explicitly account for economic factors that impact Medicaid enrollment, so pandemic enrollment estimates may be conservative, though economic impacts were different during the pandemic-induced recession compared to past recessions. Unlike prior recessions that resulted in large shifts in income and losses of employer coverage, this recession largely affected low-wage workers who may have already been eligible for Medicaid. Both models start with Medicaid enrollment and spending data for all full or partial benefit enrollees ever enrolled from the preliminary calendar year (CY) 2019 Transformed Medicaid Statistical Information System (T-MSIS). We used the CY 2019 T-MSIS data as an estimate for FY 2019. In this analysis fiscal year (FY) refers to the federal fiscal year which runs from October 1st to September 30th. Since both estimated models in this analysis rely on actual Medicaid enrollment data for all enrollees (full and partial benefit) ever enrolled in 2019, our estimates are potentially not comparable to other enrollment estimates during this period due to higher baseline enrollment assumptions.

Baseline Enrollment: We used KFF estimates of Medicaid enrollees by enrollment group based on analysis of data from the Preliminary CY 2019 T-MSIS for baseline FY 2019 enrollment by eligibility group. We inflated enrollment to FY 2020, 2021, and 2022 using an average of the projected annual growth rates for each eligibility group as reported in the 2018 Actuarial Report by OACT and the March 2020 baseline estimates from the CBO. We averaged growth from the CBO and OACT because the two estimates had substantial differences in growth rates for some eligibility groups. While there is likely variation between states, all baseline growth rates in this analysis are applied by eligibility group, with the same growth rates by eligibility group applied across all states.

Baseline Spending per Enrollee: We used KFF estimates of Medicaid spending per enrollee (full or partial benefit) by eligibility group based on analysis of data from the Preliminary CY 2019 T-MSIS for baseline FY 2019 spending per enrollee by eligibility group. We inflated spending per enrollee to FY 2020, 2021, and 2022 using an average of the projected annual growth rates for each eligibility group as reported in the 2018 Actuarial Report by OACT and the March 2020 baseline estimates from the CBO.

Baseline Spending: Spending was calculated by multiplying the baseline spending per enrollee estimates by the baseline enrollment estimates each year.

Pandemic Enrollment: We inflated baseline FY 2019 enrollment estimates to FY 2020, 2021, 2022 using annual MOE growth rates plus baseline enrollment growth rates for each year to create final pandemic growth rates for each eligibility group. These pandemic growth rates account for growth due to the MOE as well as expected enrollment growth without the pandemic. The MOE growth rates by eligibility group were calculated from a KFF MOE simulation analysis using 2018 T-MSIS data to approximate MOE enrollment growth. We assumed FY 2020 had only 7 pandemic months, so we include only 7 months MOE growth for FY 2020. For FY 2021, we include another 5 months of MOE growth, and then 7 months of reduced MOE growth. To account for slowing enrollment growth trends later in the pandemic, we reduce the annual MOE growth rates for the second part of FY 2021 and FY 2022. To do this, we calculated actual monthly growth rates experienced during the pandemic as captured by KFF analysis of Centers for Medicare and Medicaid Services (CMS) Performance Indicator Project Data. We calculate the rate at which the average monthly growth rates decline from each corresponding time period and use those rates to reduce our MOE growth rates from the simulation in the second part of FY 2021 and FY 2022. Due to a lag in available data, we used actual growth for the months available and projected the remaining months based on previous monthly trends. To account for variation in enrollment growth during the MOE by state, we scaled the MOE growth rates for each state using a ratio of the state’s total enrollment growth each FY to the total national enrollment growth using the CMS Performance Indicator Project data. Additional enrollees due to the MOE were calculated by subtracting the pandemic enrollment by the baseline enrollment each year. We assumed the MOE would be in place until August 1, 2022.

Pandemic Spending and Estimated Fiscal Relief: We assumed the same spending per enrollee estimates for our baseline and pandemic spending estimates since the pandemic both increased and decreased overall costs. Spending during the pandemic was calculated by multiplying the baseline spending per enrollee estimates by pandemic enrollment estimates. State and federal shares of spending were calculated using state specific FMAP values in addition to the 6.2 percentage point FMAP increase for all eligibility groups, except for the ACA adult expansion group which has a 90 percentage point FMAP. Estimated fiscal relief was the reduced state spending due to the increased FMAP. We assumed total spending remained constant and that increases in the FMAP from FFCRA increased federal spending and reduced state spending by the same amount. Fiscal relief was calculated starting from FY 2020 Q2 through the entirety of FY 2022.

Special Adjustments: Special adjustments using state data were made for states that expanded Medicaid after 2019 including Idaho, Utah, Missouri, Nebraska, and Oklahoma, as well as for Florida, Virginia, and Texas due to anomalies in enrollees reported in their ACA adult expansion group. ACA adult expansion enrollment for recent expansion states was estimated using 2020 MBES data and data reported on state Medicaid websites. Spending per enrollee for the expansion population in recent expansion states was estimated based on the median ratio of other adult spending to ACA adult expansion group spending across all states. The traditional FMAP values for Missouri and Oklahoma were increased by 5 percentage points in FY 2021 Q4 and FY 2022 to account for the temporary fiscal incentive for states to adopt Medicaid expansion authorized by ARPA.

Appendix

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