With researchers expecting a lot of fluctuating eligibility between Medicaid and exchange subsidies among lower-income consumers, states and insurers will have to devise new ways to solve the problem of continuity of care disruptions.
Almost half of American adults eligible for Medicaid or private health plan subsidies are likely to experience changes in their eligibility -- or "churn," as the phenomenon has been called since the 1970s -- according to new research from Harvard health policy professor Benjamin Sommers and colleagues published in Health Affairs.
Even if all states expanded Medicaid eligibility, Sommers and colleagues found, about have of all adults earning up to 400 percent of the federal poverty level would still experience some changes in eligibility over the course of the year, with more people working in temporary jobs, on "gig" contracts or experiencing regular periods of unemployment, especially in states with seasonal industries like tourism.
"These eligibility changes could lead to both gaps in coverage and disruptions in the continuity of care, because people might have to find new providers or change their existing health treatments if their new insurance plan uses a different provider network or covers different services than their old plan did," wrote Sommers and his co-authors, from Harvard, Vanderbilt and George Washington University.
In a state-by-state analysis, Sommers and his colleagues found a small correlation between poverty rates and churning, with adults in states like Mississippi, one of the poorest in the country, more likely to see eligibility continuity.
Mississippi, the state with the highest poverty rate -- with 24 percent of population living below the poverty level, according to Census data -- has the lowest estimated churn rate, with just 45 percent of adults earning up to 400 percent FPL likely to see fluctuating eligibility, followed by Alabama, New York, Texas and Vermont.
Sommers et. al. found churn tending to be higher in states with lower poverty levels, in states like Colorado and New Jersey, both with poverty rates below the national average, where 57 percent and 53 percent of adults respectively are estimated to have eligibility fluctuations over the course of a year.
Overall, they found, every percentage point decrease in a state's poverty rate is associated with a 0.29 percent increase in churning over 12 months, although they note "the relationship is not exactly linear: Churning rates were quite similar across states with low and medium levels of poverty, in contrast to high-poverty states."
Indeed, both New York and Vermont have churn rates on the lower end (46 and 47 percent) and also lower-than average poverty rates.
Regardless of that weak correlation, from New York to West Virginia (a relatively poor state that is expanding Medicaid eligibility), churn is going to be a persistent problem, and Sommers and colleagues are proposing several options for states.
States could adopt 12-month continuous eligibility periods in Medicaid, an option offered by the Centers for Medicare & Medicaid Services through federal waivers. (A bill in Congress would also make that option available without waivers.)
A slightly more "incremental option," Sommers and colleagues suggest, is available through a rule CMS codified in 2012 letting states use projected annual income rather than current monthly income to determine eligibility, which could reduce churn rates particularly for seasonal workers.
Another solution for states is adopting the Medicaid "private option" to subsidize private health plans for Medicaid-eligible residents, as Arkansas and Iowa are doing on an experimental basis, with Arkansas extending subsidized private coverage to those earning as little as 17 percent FPL and Iowa setting the baseline at 100 percent FPL. By Sommers and others' estimates, the private option could reduce churn by as much as two-thirds in states like Arkansas where Medicaid eligibility previously has been restrictive. (New Hampshire and Pennsylvania are also set to seek federal approval for private option Medicaid expansions.)
A fourth option that states could adopt in 2015 is using the ACA's Basic Health Program to insure everyone up to 200 percent FPL using Medicaid and 95 percent of the federal funding that would otherwise go to private health plan subsidies.
And another approach states could take is to certify Medicaid managed care plans for state insurance exchanges, so that members fluctuating in eligibility would be able to continue in the same provider networks by enrolling in plans that could serve dually as MCOs or qualified health plans.