As you may have heard, the COVID-19 Public Health Emergency (PHE) and national emergency (NE) are coming to a close on May 11, 2023. The focus of this article addresses the potential impact to commercial/employer plan enrollment shifts as a result of the unwinding of Medicaid continuous coverage protection.
State agencies of Medicaid have begun the process of redetermining which Medicaid participants may no longer be eligible and, consequently, dropped from Medicaid. The exact timing will vary by state and is spread out over the next several months.
The Medicaid continuous coverage rule increased Medicaid enrollment by roughly 30% to approximately an additional 18 million participants. Legislation passed late last year allows states to redetermine eligibility and begin involuntary terminations. It is estimated that roughly 6 million individuals who lose Medicaid coverage will be eligible for coverage under an employer-sponsored health plan.
Rights to Enroll in an Employer-Sponsored Medical Plan
Losing Medicaid triggers a HIPAA special enrollment right in employer-sponsored medical plans. Typically, the window for notifying the employer plan of losing Medicaid eligibility is 60 days. However, since we are still in the Outbreak Period through July 10, 2023, the 60-day window is temporarily extended for anyone losing Medicaid before that date.
Enrollment Shift Projections and Nuances
Federal regulators estimate that 5-6 million people who lose Medicaid coverage will seek enrollment in employer-sponsored health plans. This aligns with other CMS projections. This represents a potential increase of approximately 3% to the total amount of people currently participating in private insurance (~160M).
Some group health actuaries[i] anticipate that members coming onto the plan would be expected to have similar costs as those currently on the plan unless other information is available from the employer about these members. Thus, the additional members would be expected to result in an increase of 3% cost for all employer-sponsored plans.
Based on an employer’s specific demographics and industry, the impact could be very close to zero (not noticeable among other changes in membership throughout the year). The impact could also be much higher than 3% for employers that were more affected by the pandemic and head count reduction. Employers from certain industries such as food service, hospitality, and service industries will likely be most impacted. Those employers that didn’t experience significant head count changes are unlikely to feel much impact.
Again, for most employers, we do not expect this event to cause any noticeable increase in cost nor enrollment. However, for specific employers in certain high turnover industries (like those mentioned above), there could be a cost increase due to the number of new enrollees that should be considered in company financials on top of the expected medical trend. Life sciences organizations that call upon large employers are unlikely to hear much from their customers regarding shifting Medicaid enrollment, as their customers tend to be mostly large, self-insured groups from industries outside those effected most.
References: