This is the second installment of our series about the state of health care purchasers, check out our first piece on employer strategy here
Medicaid enrollment booms amid pandemic
When the word “recession” started floating around last spring, many of us in the health care industry worried we’d see a large jump in the uninsured rate. But as we reported in our 2021 State of the Union, despite a steep drop in commercial coverage, the number of individuals without health insurance remained relatively stable. Some people who lost coverage went to the exchanges, but millions more went to Medicaid. States also suspended Medicaid disenrollment for the length of the public health emergency (PHE), halting the typical outflow from the program. Together, these factors generated a 15% increase in Medicaid enrollment between February 2020 and March 2021 (when the latest data was made available by CMS).
This sudden and significant enrollment growth makes it remarkable that most states aren’t targeting Medicaid spending to reduce overall budgetary pressures. Just 7 states recommended reducing provider payment for fiscal year 2022, in contrast to the 39 states that cut or froze provider payment for fiscal year 2010 amid the 2008-2009 recession. This is in large part because state tax revenues did not suffer as much as expected—even the tourism-heavy states that did see major revenue declines are anticipating a relatively quick recovery. Congress also included a 6.2 percentage point increase in federal Medicaid dollars during the PHE in the CARES Act last March. With financial support from federal and state governments, Medicaid programs now have the flexibility to shift their attention from near-term savings to longer-term initiatives. These recommendations include everything from increasing provider payment to reducing drug spending, but there is a clear focus on programmatic improvements rather than pure cost control.
Taking aim at health disparities
Beyond making enhancements to payment, benefits, and eligibility, many states are taking their relative financial stability as an opportunity to double down on health equity and social determinants of health (SDOH). One of the most common targets is maternal and child health: 36 states are adopting a benefit, financed through the American Rescue Plan passed this spring, to expand postpartum Medicaid coverage from 60 days to 12 months starting next April.
As a growing share of beneficiaries are getting their coverage through private Medicaid Managed Care Organizations (MCOs), there is also increasing focus on the role health plans play in promoting equity. Five states are in the process of requiring Medicaid plans to adopt the National Committee for Quality Assurance’s Health Equity accreditation. To receive this distinction, plans must collect demographic data, provide language assistance and culturally responsive provider networks, reduce health disparities, and increase organizational diversity. This is just one example of the many steps states took last year to build SDOH requirements into their MCO contracts.
Private health plans are acting independently as well to address social determinants of health. Also prioritizing postpartum care, the Blue Cross Blue Shield Association recently announced a plan to cut racial disparities in maternal health outcomes in half over the next five years. To help provide more job skills while building a stronger health care workforce, the University of Pittsburgh Medical Center (UPMC) launched Freedom House 2.0 in 2020. This program offers free first responder and health management training to individuals from underrepresented communities as a path to a career in health care. More case studies of progressive Medicaid plans addressing social needs and closing care gaps can be found in the Leading Lights Summit hosted by our Health Plan Advisory Council earlier this summer.
These actions align with the values of health plans and Medicaid programs, and are occurring within a broader movement condemning inequality in every facet of society. But there are potential long-term financial benefits too. By intervening upstream—providing needed social services and culturally sensitive care—payers can potentially avoid more costly medical expenses in the future.
What does this mean for the health care industry?
Medicaid rolls have seen an unprecedented spike in the last 18 months, which is likely to hold through at least the end of the year. But this trend won’t last forever. When the PHE expires—and the funding boost and maintenance of enrollment measures expire with it—we’ll likely see a drop in Medicaid enrollment. How significant that decline is, and whether those individuals will have access to other forms of coverage, depends on the future political and labor environment. Relatedly, the financial stability Medicaid programs currently enjoy may erode with the loss of the enhanced federal match if state tax revenues take a hit next year. States may be forced to rethink their Medicaid plans and once again turn to widespread cost-cutting measures. We’ll be tracking state and federal policies closely as the situation evolves across early 2022.
In the meantime, states are calling on their partners to address health disparities and social needs. The first step is to understand your state’s requirements and goals, then create a plan to incorporate these metrics into an existing population health or value-based care strategy. Providers and plans can be rewarded for effectively managing the social needs of Medicaid patients, making it a valuable opportunity to advance your equity journey. When it comes to caring for Medicaid populations, a rising tide lifts all boats—states, plans, providers, and most importantly patients benefit from a system committed to meeting social needs before they escalate to health emergencies.