Reducing Medicaid Churning: Extending Eligibility For Twelve Months Or To End Of Calendar Year Is Most Effective

Abstract

Medicaid churning--the constant exit and reentry of beneficiaries as their eligibility changes--has long been a problem for both Medicaid administrators and recipients. Churning will continue under the Affordable Care Act because, despite new federal rules, Medicaid eligibility will continue to be based on current monthly income. We developed a longitudinal simulation model to evaluate four policy options for modifying or extending Medicaid eligibility to reduce churning. The simulations suggest that two options--extending eligibility either to the end of a calendar year or for twelve months after enrollment--would be the most effective methods for reducing churning. The other options--a three-month extension or eligibility based on projected annual income--would reduce churning to a lesser extent. States should consider implementation of the option that best balances costs while improving access to coverage and, thereby, the health of Medicaid enrollees.

Keywords: Health Reform; Medicaid.

Exhibit 2

Four Policy Options’ Estimated Effects on Percentage Change in Adults with Medicaid Churning, with Three Alternative Pairs of Simulation Assumptions Source: Authors’ simulation model using 2004–2007 Panel of the Survey of Income and Program Participation. Notes: High Participation and Low Participation are assumed Medicaid participation rates of 85% and 50%, respectively. High Disruption and Low Disruption are assumed administrative disruption rates of 35% and 15%, respectively.

Exhibit 3

Four Policy Options’ Estimated Effects on Percentage Change in Adults Covered All Year by Medicaid, with Three Alternative Pairs of Simulation Assumptions Source: Authors’ simulations using 2004–2007 Panel of the Survey of Income and Program Participation. Notes: High Participation and Low Participation are assumed Medicaid participation rates of 85% and 50%, respectively. High Disruption and Low Disruption are assumed administrative disruption rates of 35% and 15%, respectively.

Exhibit 4

Four Policy Options’ Estimated Effects on Percent Change in Average Monthly Medicaid Caseload, with Three Alternative Pairs of Simulation Assumptions Source: Authors’ simulations using 2004–2007 Panel of the Survey of Income and Program Participation. Notes: High Participation and Low Participation are assumed Medicaid participation rates of 85% and 50%, respectively. High Disruption and Low Disruption are assumed administrative disruption rates of 35% and 15%, respectively.