State of the States: Fall 2023

building facade

North Carolina breaks budget impasse over Medicaid expansion

Republican lawmakers in North Carolina finally agreed on a two-year budget bill in September, breaking the six-month impasse that prevented the state’s Medicaid expansion from going into effect as scheduled on July 1. Up to 600,000 residents are expected to gain Medicaid once the expansion officially starts, which Gov. Roy Cooper (D) confirmed will be Dec. 1.

Nearly 70,000 North Carolinians have lost Medicaid coverage since June 1, when the state resumed Medicaid determinations following the end of the COVID-19 continuous coverage requirements (see below). Many of those who lost coverage would have remained Medicaid-eligible had the state expanded Medicaid as planned on July 1 under the law signed last March by the governor (see States of the States, Spring 2023).

Even though it normally takes a state 90 to 120 days to implement Medicaid expansion once it receives legislative authority to do so, the state’s Department of Health and Human Services insists it can secure the required federal approval and issue rules for public comment within two months, given that it has done much of the advance work during the impasse. (The Centers for Medicare and Medicaid Services gave initial approval for the expansion to start Oct. 1.)

Ten states are continuing to opt-out of the full Medicaid expansion under the Affordable Care Act. This includes Georgia, whose partial Medicaid expansion program has enrolled only 265 people since it began July 1 (see State of the States, Summer 2023), doing little to counter conclusions from a Center for Budget and Policy Priorities report that confusing and onerous work reporting requirements are intended to erect barriers to coverage.

The incoming House Speaker in Mississippi did announce this month that Medicaid expansion will “be on table” for the first time when the legislature reconvenes for 2024. The Mississippi Supreme Court had invalidated the state’s ballot referendum process, thus preventing voters from deciding upon Medicaid expansion even though recent polling showed that up to 80% of state residents support expanding the program.

Medicaid unwinding redeterminations paused in 30 states due to high error rates

According to the latest figures from the KFF Medicaid Enrollment and Unwinding Tracker, nearly 7.8 million Medicaid enrollees have lost coverage in 48 states and DC since post-COVID redeterminations resumed in April (see State of the States, Spring 2023). Nearly three-quarters of that total continue to lose coverage solely for “procedural” reasons (i.e., not updating their contact information and/or failing to promptly respond to verification requests).

The data validates early concerns from HFA and coalition partners that most coverage losses may be erroneous and needlessly disrupt critically-needed care for persons with chronic conditions. Mitigating against procedural losses remains a priority of HFA given studies such as those from The Urban Institute concluding that Medicaid-eligible adults who are wrongly terminated are at least three times more likely to delay needed medical care due to cost.

There continues to be wide variation in disenrollment rates across reporting states ranging from 69% percent in Texas (where 900,000 have lost coverage) to 14 percent in Maine.  However, most alarming for patient groups is the staggering rate of procedural and potentially wrongful terminations, which continue to reach as high as 99 percent in New Mexico (and more than 90 percent in Georgia, Missouri, and Utah) while other states have been able to minimize them (as low as zero percent in Massachusetts/Wyoming and 21% in Maine). Two states with the highest number of total terminations (Texas and Arkansas) have disenrolled at least 75% of that total for procedural reasons.

Another disturbing trend from initial KFF data shows that children represent 41% of all Medicaid terminations among the 17 states reporting age breakouts. However, this figure is nearly twice as high in Texas, where 81% of terminations have been among children (far more than the next highest state Kansas at 57%). However, the most troubling data released by the Texas Health and Human Services Commission revealed that not only have about 507,500 children lost coverage from April-August solely for procedural reasons (and may still be Medicaid-eligible) but more than 55,000 women lost coverage for procedural reasons despite being pregnant.   

The federal Centers for Medicare and Medicaid Services (CMS) warned in an Aug. 30 letter to states that a “glitch” in state eligibility systems may be leading to most of the erroneous coverage losses among children.  This is because the systems were wrongly conducting automatic renewals at the family-level and not individual-level, even though individuals in a family may have different eligibility requirements.

CMS has subsequently paused Medicaid disenrollments in 30 states that self-reported such system errors, causing at least 500,000 Medicaid enrollees nationwide to already have had their coverage reinstated. Several states have taken additional precautions including Hawaii (which paused all procedural terminations until 2024) and Minnesota. In both states, Medicaid enrollees whose eligibility has yet to be verified were granted an extra month to submit documentation.

CMS assured stakeholders that the current budget impasse in Congress will not prevent the agency from conducting “nearly all” of its oversight and enforcement of state “unwinding” actions, even though roughly half of all staff would be furloughed during a federal government shutdown that could begin as soon as Oct. 1.

Medicaid “unwinding” results in expected backlogs of applications and appeals

Overwhelmed state Medicaid agencies are facing huge delays in processing Medicaid applications and appeals as a result of mass coverage losses during the post-COVID “unwinding” (see above).

For example, the Texas Health and Human Services Commission acknowledged this month that more than 54,000 applications submitted during or before March have yet be processed and 24% of applications processed in August had already gone well past federal deadlines for timeliness.  According to KFF, Texas currently leads the nation with more than 900,000 Medicaid “unwinding” terminations (roughly two-thirds of which are for procedural reasons).

In Arkansas, Department of Human Services officials disclosed that they received more than 2,571 appeals of Medicaid terminations in July, compared to less than 400 per month before the pandemic. Despite hiring additional staff to accommodate the predicted surge, DHS concedes that cases are taking far past the 90-day federal deadline for a final appeal decision. Arkansas trails only Texas and Florida in the total number of Medicaid determinations despite a much smaller population. It has already eliminated more than 12% of its Medicaid rolls and has pledged to complete redeterminations for all one million enrollees in only six months—the fastest rate of any state (see State of the States, Spring 2023).

In Florida, three individuals represented by the Florida Health Justice Project and National Health Law Program have filed the first lawsuit in the nation to block procedural terminations during the “unwinding”. The lawsuit alleges the Florida Medicaid program is relying on deliberately misleading notices that confuse enrollees about why their coverage is terminated and fails to inform them of their federal due process right to continue their Medicaid benefits during the appeal process if they appeal within the brief ten-day period Florida requires.

According to KFF, 31 states have already received waivers from CMS to help mitigate against delays in re-enrolling individuals who were wrongly terminated from Medicaid. For example, 23 states are allowed to extend the amount of time to take final actions on fair hearing requests beyond the standard 90 days and retroactively reinstate coverage from the date of termination for those found to be eligible after a procedural denial.

Tennessee leads the nation with 13 such waivers. Florida remains the only state without an approved (or even requested) waiver.

States increasingly seek to extend continuous Medicaid coverage for children

Amid higher than anticipated terminations of Medicaid coverage for children during the post-COVID “unwinding” (see above), additional states have enacted new laws to protect access to care for their youngest Medicaid enrollees.

States have long had the option of extending 12-month continuous eligibility to children through Medicaid or the Children’s Health Insurance Program (CHIP). Congress made this mandatory in the Consolidated Appropriations Act of 2022.

Oregon and Washington became the first states to receive landmark federal approval to extend continuous Medicaid/CHIP eligibility for children through age six under a Section 1115 waiver (see State of the States, Fall 2022). This prevents the “churn” that often causes children’s medical needs to be interrupted whenever family income fluctuates and they go on and off Medicaid during the year. It also lessens the administrative burden for states trying to monitor those changes.

During their 2023 legislative sessions, Colorado and Ohio authorized extending continuous eligibility through age four while Minnesota extended through age six. The Council for the District of Columbia will hear comparable legislation in October (also extending continuous coverage through age six.)

Rhode Island and Montana also debated multi-year continuous eligibility for young children, while Texas and Maryland lawmakers introduced similar measures last session.

New York is the only state that currently has 12-month continuous Medicaid eligibility for adults. The federal Centers for Medicare and Medicaid Services recently approved continuous eligibility waivers that will cover adults in Illinois and Oregon.

Delaware joins 26 other states in creating Rare Disease Advisory Council

Governor John Carney (D) made Delaware the 27th state to create a Rare Disease Advisory Council (RDAC) when he signed S.B. 55 in late July.

The RDAC will be housed in the office of Lt. Governor Bethany Hall-Long (D), a registered nurse who pushed for the legislation. It is intended to give patients, caregivers, and families a platform to educate lawmakers about the issues specific to persons with rare disorders.

Maryland and Indiana are the only other states that have created RDACs during 2023 (see State of the States, Spring 2023).  According to the National Organization for Rare Disorders, legislation creating RDACs is being actively pursued in at least seven other states including California and Texas.

Individual mandate funds dramatic cost-sharing reductions for Covered California

Covered California announced in July that it will use $82.5 million appropriated by the legislature in the 2024 budget to dramatically reduce out-of-pocket costs for lower-income enrollees.

The state-based ACA Marketplace will make the subsidies available to those earning less than 250 percent of the federal poverty level (or about $34,000 per year). This represents just over one-third of Covered California’s 1.75 million enrollees. The move will eliminate deductibles entirely for all three silver-tier cost-sharing reduction plans. Other benefits will vary by plan but include lower generic drug costs and copays for primary care, emergency care and specialist visits, as well as lower annual out-of-pocket maximum limits.

The cost-sharing reductions for 2024 are expected to continue through 2025 when funding under the budget deal will increase to $165 million. The additional support comes on top of the federal subsidies continued under the Inflation Reduction Act (IRA) through 2025, which already ensured that 20% of Covered California enrollees had access to zero dollar premium plans. 

California became the first state in 2020 to provide state-funded premium subsidies for Marketplace plans. This California Premium Subsidy Program has been temporarily supplanted by the IRA subsidies and will resume after 2025.

The latest cost-sharing reductions will help to shield most Covered California enrollees from the 9.6 percent average increase in premiums for 2024, which officials attribute to higher utilization after the pandemic, as well as the rising cost of health services and labor shortages. (Rates had increased by less than two percent on average during the pandemic but 5.6 percent for 2023).

Consumers in Washington state will also be shielded from an average premium increase of nine percent (for the second year in a row) as state-funded premium subsidies will reduce Marketplace premiums to about $10 per month for consumers earning up to 250 percent of the federal poverty level who select silver or gold Cascade Care plans. Cascade Care is the public  insurance option created by Washington in 2021; its plans are available at 50 percent lower cost to consumers in 37 counties.