Shifts In Earnings For Consumers Near Medicaid Line Can Threaten Coverage

Low-income consumers whose earnings fluctuate or family circumstances change over the course of the year risk losing their health coverage if they shift between eligibility for Medicaid and coverage on the health insurance exchanges. That “churning” isn’t new to Medicaid, but the health law’s addition of millions of customers whose incomes hover near the Medicaid line raises concerns about how well the insurance marketplaces can handle the flux.

The health law aims to minimize churning by making the state marketplaces a one-stop shop for both types of coverage. That’s still a work in progress, but some states are ahead of the curve in employing strategies to help ensure people don’t fall through the cracks.

Last year, when Jillian Naccache took in a roommate at her Bellingham, Wash., house, the extra money pushed her income above 138 percent of the federal poverty level ($16,105 for an individual), making her no longer eligible for Medicaid. (So far, 28 states and the District of Columbia have extended Medicaid coverage to adults with incomes below that threshold as allowed under the health law.)

Naccache, 39, logged onto the state health insurance exchange to report her income change and picked a health plan. Based on her estimated income for the year, she received a monthly premium tax credit of $192, reducing the amount she owed to $128.

A few months later the roommate moved out and her income dropped back below the Medicaid threshold. Naccache logged onto the state marketplace again to report the change and was re-enrolled in the Medicaid program.

The process wasn’t entirely seamless: When she went back on Medicaid, Naccache wound up paying an extra month’s premium on the private market when the two types of coverage overlapped. But switching back and forth was mostly simple, she says.

“It cost me a bit more money, but that was better than having a gap in coverage,” Naccache says.

Washington has made good progress in realizing the health law’s vision of a single online portal for consumers to enroll in marketplace plans and get financial subsidies or sign up for Medicaid, says Matthew Buettgens, a senior research associate at the Urban Institute who has written about how to minimize churning.

“In Washington state, the enrollment and eligibility interface between Medicaid and qualified health plans [sold on the exchange] was integrated from the start,” he says. “That’s very unusual.”

Among the other 14 state-based marketplaces, New York, Rhode Island and Kentucky also stand out for their efforts to integrate Medicaid and exchange plan data and information technology, says Heather Howard, director of the State Health Reform Assistance Network, a program that provides technical assistance to help states implement the health law.

Such integration is more complicated when the federal government is running the state’s marketplace, experts say. After a rocky beginning, integration in those states appears to be improving, says Tricia Leddy, senior fellow for state health care programs at the Center for Health Care Strategies.

In the Medicaid and Children’s Health Insurance Programs, where eligibility changes depending on income and family size, churning is not uncommon. Adding subsidized health insurance on the exchanges to the process expands the possibilities for churn. According to an analysis by Buettgens, 7 million people could churn between Medicaid and exchange coverage annually.

Now that the exchanges have concluded their first year, most states are just beginning to turn their attention to the problem of churn, experts say. Data is scarce. Washington is one of the few states that has reported any figures. Between April 2014 and March 2015, 20,078 people who were enrolled in coverage on the Washington state exchange moved into Medicaid, while 13,190 Medicaid enrollees moved into the exchange.

At the beginning of March, there were 691,930 people enrolled in Medicaid and private plans through the health benefit exchange.

The state is researching who is churning and why, says Mary Wood, assistant director at the Medicaid agency’s division that handles eligibility, policy and service delivery.

Another strategy to reduce harm caused by churn is to ensure that people’s insurance coverage and provider networks are similar whether they’re on Medicaid or an exchange plan.

When Naccache’s coverage changed, her doctors remained the same, she says.

In Washington state, three out of the five Medicaid managed care plans sell comparable plans on the exchange, says Wood. That may reduce customer problems finding in-network doctors and hospitals.

Some states have adopted a “basic health program” as permitted under the health law. They offer health coverage similar to that on an exchange for people with incomes up to 200 percent of the federal poverty level, reducing the magnitude of churn between Medicaid and exchange plans.

Consumer advocates say that efforts to integrate IT and align plans on both sides of the line may fall short if simple enrollment timing issues aren’t addressed.

Naccache ended up paying for an extra month of exchange coverage during the transition back to Medicaid. That’s a tough financial hit, but advocates are more concerned about the possibility that people’s coverage will lapse while they’re changing plans. Unlike Medicaid, where coverage can be retroactive to when someone became eligible, exchange coverage doesn’t work that way.

In order to have marketplace coverage on the first of the month, people have to sign up for a plan by the 23rd of the previous month in Washington. In some cases people are learning that they’re eligible for a marketplace plan too late to do so, says Janet Varon, executive director of Northwest Health Law Advocates.

When that happens, “People are having coverage gaps of a month,” says Varon. Although coverage is restored, any break is problematic, advocates say.

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