Complex Medicaid Changes Likely to Cost Many People Coverage

Arkansas, which received Trump Administration approval for a demonstration project (or “section 1115 waiver”) to take Medicaid coverage away from people who don’t work or engage in work activities for a set number of hours each month, will begin implementing the new rules on June 1.  The Administration has also approved work requirement proposals from Indiana, Kentucky, and New Hampshire and proposals from Kentucky and Indiana to end coverage for those who don’t pay premiums or renew their eligibility on time.  Enrollees, including many who are working or should be exempt from the new requirements, will likely end up losing coverage due to red tape and complexity, as our new paper explains.

The experience of several states that the Obama Administration allowed to test premiums and complex incentives to adopt healthy behaviors highlights the challenge of informing enrollees of what they need to do to protect their coverage.  (Those waivers, however, don’t take coverage away from people who don’t adopt the healthy behaviors.)  In Iowa, Michigan, and Indiana, many enrollees didn’t fully understand the new rules, state evaluations found.

• Iowa:  Iowa charges premiums to enrollees with incomes above 50 percent of the poverty line.   Enrollees don’t have to pay premiums in the first year they’re enrolled, and premiums are waived in later years if enrollees complete a health risk assessment and get a wellness exam.  But in 2015, just 17 percent of beneficiaries with incomes below the poverty line and 8 percent with incomes above it qualified for a premium waiver, an interim evaluation found.  Some 90 percent of beneficiaries surveyed didn’t know they could get their premiums waived if they got a wellness exam.  Even in September 2017, three years after the policy took effect, only about 25 percent of enrollees subject to premiums completed the health risk assessment and wellness exam.
• Michigan:  Michigan’s Medicaid expansion program under the Affordable Care Act requires adults to pay co-payments for most services but reduces their cost-sharing obligation if they complete a health risk assessment and adopt certain healthy behaviors. Yet only 15 percent of individuals enrolled in a health plan for at least six months completed the assessment and most enrollees interviewed said “they had no idea” about the healthy behavior rewards, a 2016 state analysis found. In June 2017, the state reported that only 18 percent of enrollees completed the activities necessary to reduce their cost-sharing obligation despite state efforts to increase participation.
• Indiana:  Indiana’s waiver program (called the Healthy Indiana Plan) gives every enrollee an account modeled on a health savings account; at the end of the year, enrollees who paid all their premiums for the year can roll over a portion of unspent funds in the account to reduce their premiums in the following year.  But only 60 percent of survey respondents in the state’s evaluation said they’d heard of the accounts, and only three-fourths of those who had said they had one.

Despite the findings, Indiana plans to implement a work requirement starting next year, and Michigan lawmakers are close to adopting a requirement. The risks that enrollees will not understand the rules are much greater in states with work requirements and lock-outs — with people losing coverage, not just the opportunity to reduce their out-of-pocket costs.

In states pursuing work requirements, many enrollees are at risk of losing coverage because the new policies are complex and hard for states to explain. Kentucky, for example, will have to provide notices that include a long list of details about the new work requirement — including when it takes effect, how to claim an exemption, how to satisfy the requirement, how to document hours, what triggers a coverage suspension and the impact of suspension on annual renewal, how to apply for an exception for good cause, how to regain coverage after a suspension, and how to appeal.  The state will have to provide similar information about premiums and new lock-outs of coverage for not renewing coverage or reporting changes on time.

So far in Arkansas and Kentucky, the state is apparently relying mainly on written notices to explain the new rules. Given the state experiences cited above, plus the new rules’ complexity — especially in Kentucky, which is simultaneously implementing a work requirement, premiums, and lock-outs for not renewing coverage or reporting changes on time — the new rules will likely keep some eligible people from staying covered simply because they don’t understand them.