Reducing Medicaid Churning: Extending Eligibility for Twelve Months or to End of Calendar Year Are Most Effective Low-income adults often cycle in and out of the Medicaid program Synopsis when their income or life circumstances change. As a result, they face July 7, 2015 disruptions in care that put them at risk for poor health outcomes. Authors Katherine Swartz, Pamela F. Two policy options—extending coverage until the end of a calendar Short, Deborah R. Graefe, and year or for 12 months following enrollment—are effective in reducing Namrata Uberoi this “churning.” Journal Health Affairs, July 2015 Contact Katherine Swartz, Ph.D., Professor, Department of Health Policy Because eligibility for Medicaid is determined by current monthly The Issue and Management, Harvard T.H. Chan income, many beneficiaries temporarily lose coverage when their School of Public Health seasonal employment or overtime pay increases—and later requalify mkswartz@hsph.harvard.edu when their income dips. This churning in enrollment places Access to full article. administrative burdens on states and Medicaid managed care plans. The authors of this Commonwealth Fund– supported study looked at four policy options for addressing the problem and simulated their impact on churning and enrollment. The options include: 1) extending coverage to the end of the calendar year; 2) granting coverage for 12 continuous months, regardless of changes in income or life circumstances; 3) basing eligibility on an estimate of annual income; and 4) extending coverage by three months when a change in income or life “States should circumstances causes a loss of eligibility. consider implementation of the Extending coverage until the end of the calendar year reduced churning by Key Findings option that best 78 percent and virtually eliminated the administrative burden on states • balances costs while and Medicaid managed care plans. But by stabilizing access, it increased the improving access to number of adults covered all year by 50 percent and increased the average coverage and, monthly caseload by 14 percent. thereby, the health of Offering 12 months of continuous coverage was less effective, reducing Medicaid enrollees.” churning by 30 percent. This option increased enrollment throughout the • year by 20 percent and raised the average monthly caseload by 17 percent. Because churning and average monthly caseloads are higher, this option may be more expensive than extending coverage until the end of the calendar year. A three-month extension of eligibility had virtually no impact on churning yet produced a 4 percent increase in enrollment throughout the year and an increase in the average monthly caseload of 3 percent. • Estimating annual income to determine eligibility increased churning by 5 percent while increasing enrollment by 7 percent and the average caseload by 4 percent. • States seeking to reduce churning in Medicaid enrollment will face trade-offs between ensuring continuity of The Big Picture care and controlling health care expenditure growth resulting from improved access. Some of the expected spending increases may be offset by reductions in administrative costs related to churning—estimated at $400 to $600 per enrollee—and by reducing expenditures on hospital care that could be avoided with better ongoing care. How states view this cost trade-off may depend on their financial solvency, their willingness to extend eligibility to low-income residents, and the amount of churning they currently experience. The authors relied on data from the U.S. Census Bureau’s Survey of Income and Program Participation to About the Study predict how changes in monthly income would influence eligibility, assuming all states opted to expand Medicaid eligibility to those whose income was at or below 138 percent of the federal poverty level. The findings described here were based on the assumption that 85 percent of those eligible would opt into the program and that 15 percent would experience a disruption. The authors also simulated the effect of different opt-in and disruption rates. Extending Medicaid coverage to the end of the calendar year would maximize the number of people The Bottom Line covered by the program and produce the least disruption to beneficiaries. K. Swartz, P. F. Short, D. R. Graefe et al., “Reducing Medicaid Churning: Extending Eligibility for Twelve Months or to End of Calendar Year Are Most Effective,” Health Affairs, July 2015 34(7):1180–87. This summary was prepared by Sarah Klein.