Medicaid’s Volatile Upcoming Year
As Missouri’s legislators begin crafting next year’s budget, one of the biggest questions they’re facing is how much the state’s Medicaid program is going to cost. Because Missouri’s budget is constitutionally required to be balanced, the size of Medicaid will directly impact our state’s ability to pay for other funding priorities.
It should be no shock that the past two years have been tumultuous and expensive for Missouri’s largest government program. Medicaid fulfilled its role as the state’s health coverage provider during a global pandemic, and on top of that, Missouri also adopted Medicaid expansion. These two factors have the potential to swing state Medicaid spending by billions of dollars.
Today, Missouri’s Medicaid program enrollment sits at the highest point in state history, which as I’ve written before, is in large part because of COVID-19. Fortunately, there’s hope that the federal state of emergency for the pandemic will end in the next few months. Such a move would represent a green light for states to begin once again checking whether program enrollees still qualify for the services they’re receiving (one of the conditions of receiving stimulus funds for Medicaid was not removing anyone from the rolls for the time being).
This is important because enrollment is the single biggest driver of Medicaid spending, and there are many reasons to believe that there are large numbers of ineligible enrollees right now. According to the Urban Institute, more than 350,000 current enrollees could lose coverage if the state starts checking eligibility again. To put that number in context, even if you assume the monthly cost of coverage for these enrollees is $400 (it’s likely higher), this is saying the state may be spending $140 million per month on people who don’t qualify to receive services!
It should not be controversial to insist that state tax dollars only pay the cost of health coverage for those who meet the qualifications to receive it. In normal times, federal law requires states to check eligibility regularly to ensure funds aren’t being wasted. Federal law also requires those who are qualified to receive benefits regardless of any administrative difficulties. This is a problem for many Missourians right now, as the wait time for application processing far exceeds what’s allowed by federal law. (It should be noted that those who are eligible for coverage when they apply will have their qualified costs covered retroactively once enrolled regardless of processing time.)
To summarize: There’s an enormous backlog of current enrollees whose eligibility needs to be checked, and once an eligibility check is completed we will likely see a major decline in total enrollment. But there’s also a sizable backlog of applicants who are waiting to be enrolled—and once that process is complete, total enrollment will increase.
The good news is that the governor and legislature appear to recognize the enormity of the task ahead; both have included increased funding to help reduce the administrative backlogs in their budgets. It’s anybody’s best guess how much Medicaid enrollment will fluctuate over the next year, but there are potentially billions of reasons that state taxpayers should care about enrollment numbers.