April 6, 2004
New policies cut more than 20,000 people from Washington Medicaid
New eligibility verification policies for the Washington State Medicaid program have resulted in 20,615 people — primarily children — losing coverage from April through December 2003. Most of the people cut from Medicaid have low enough income to qualify, but no longer participate due to “the hassle factor” and other issues explained in a working paper by the Health Policy Analysis Program (HPAP) at the University of Washington. This number exceeded the estimate projected by the Washington State Department of Social and Health Services for the entire 2003-05 biennium in the first six months.
The policy changes include requiring employer verification of income for families applying to Medicaid programs for children and pregnant women. Eligibility reviews have increased in frequency from annually to every six months. The new rules also rescind continuous eligibility for Children’s Medicaid, which previously allowed a child to remain eligible for one year after enrollment, regardless of changes in family income. These new policies, detailed in the 2003-05 state budget, were predicted to result in approximately 19,000 fewer people qualifying for Medicaid by the end of FY 2005. The net savings from dis-enrollment was projected to be $23 million in state funds for the biennium.
However, according to national studies reviewed in HPAP’s paper, The Costs of Enrollment Instability in Washington State’s Medicaid Program, “barriers to enrollment, not ineligibility, are the main causes of dis-enrollment from Medicaid and SCHIP [State Children’s Health Insurance Program].” National studies show that few low-income families experience enough upward mobility over the various time periods studied to lose eligibility.
In Washington state, 22 percent of children who lose Medicaid coverage re-enroll in the program within nine months.
“It’s likely the majority of those children who do not return become uninsured,” says Mark Gardner, HPAP senior policy analyst and primary author of the report. “Though net savings may accrue to a particular agency or line item in the budget, these costs are shifted to health plans and providers in the form of uncompensated care and represent a higher cost to the health system overall.”
The report contains confidential interviews with medical clinics, hospitals and a health plan that contracts with Medicaid in Washington state. Providers report administrative delays in obtaining Medicaid reimbursement and note that charity care has increased by as much as 100 percent over the past year. The health plan reports a drop in total monthly payments from DSHS as enrollment declines and a rise in re-enrollment expenses as Medicaid recipients cycle off and on the program. The plans see a subsequent increase in claims when patients re-enroll in the program, frequently because they have put off getting needed care.
The Health Policy Analysis Program is a policy center at the University of Washington School of Public Health and Community Medicine. The report was funded by the Health Improvement Partnership of Spokane and the Washington State Medical Assistance Administration. The full report is available on HPAP’s Web site at www.hpap.washington.edu.
