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At least 100,000 low-income Minnesotans on Medicaid could lose coverage as federal COVID rules wind down

With a federal moratorium on kicking Medicaid enrollees off during the COVID-19 pandemic, enrollment in Medicaid grew by 330,000 people in Minnesota. It grew nationally by nearly 28% to 90.9 million people.

Patient in a doctor's office
Estimates are between 100,000 and 280,000 of the 1.5 million Minnesotans currently on Medical Assistance and MinnesotaCare might lose coverage by the spring of 2024.
REUTERS/Callaghan O'Hare

No one is totally sure how many Minnesotans will lose their health insurance over the next year due to the “unwinding” of COVID-era federal rules meant to keep low-income people on Medicaid. But even low-end estimates from state officials puts the number at 100,000 people.

The high end? That would be 280,000 of the 1.5 million Minnesotans currently on Medical Assistance and MinnesotaCare who might lose coverage by the spring of 2024. The first could be notified by July that what was termed “continuous enrollment” under Medicaid is no more.  If they or their families are no longer eligible for Medicaid, they will lose their health coverage.

State Rep. Mohamud Noor
State Rep. Mohamud Noor
“More than 200,000 potentially could lose their eligibility based on the numbers I’m hearing right now,” said Rep. Mohamud Noor, DFL-Minneapolis, who chairs the House Human Services Finance Committee. “That is a significant number. If this is not one of the most important issues within the [Department of Human Services], I don’t know what is.”

Nationally, based on an estimate from Kaiser Family Foundation that uses different scenarios of the effects, the number of people who could lose health insurance ranges from 5 million and 14 million of the 91 million people currently on Medicaid. That number, warns Kaiser, could reverse record levels of insured Americans set in 2021 when only 8.6% of people lacked coverage.

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Over the next year, states have to check every current Medicaid enrollee to determine if they still meet the income requirements: up to $37,000 for a family of four, for example. Those who do not, or can’t immediately demonstrate income levels and family size, might fall off the rolls, at least temporarily.

The committee is considering a request from Gov. Tim Walz for $22.8 million to pay for staffing to work with recipients and contract with non-profit navigators to make sure those who are eligible can keep benefits.

Ironically, this massive loss of coverage is connected to a move meant to cover more low-income people. In one of the first federal responses to the pandemic in the spring of 2020, Congress said states wouldn’t be allowed to remove ineligible people and families from assistance as long as there was a federal state of emergency.

In return, the federal government increased the amount of Medicaid matching funds it sent to states for the federal share of the program. Those payments — $1.8 billion for Minnesota alone — more than covered the increased state share of the cost of the insurance for people who might have become ineligible but instead stayed on the program. Presidents Trump and Biden continued the state of emergency throughout 2020, 2021 and 2022, extending it 11 times. And while Biden has announced he would not extend it again past May of this year, Congress already placed an end to the continuous enrollment provision for Medicaid in the budget reconciliation act passed in December.

But because the counties and one tribe that administer Medicaid in Minnesota stopped checking, they now have to go back through and see if each of 1.5 million enrollees still meet income requirements. If they don’t, they will get kicked out of Medicaid.

“We know how to do renewals but it’s been awhile. We’re a little rusty,” state Medicaid Director Cynthia MacDonald told Noor’s committee.

“This is the kind of work that our counties have done forever. They recertify people for Medicaid every month, all the time,” Minnesota Department of Human Services Commissioner Jodi Harpstead said this week during an appearance with Walz at Hallie Q. Brown Center in St. Paul. “But this time it is a higher volume. We’ve gotten as ready as we can.”

Medicaid Director Cynthia MacDonald and Karen Gibson, Health Care Eligibility and Access Administration Division Director, testifying before House Human Services Finance Committee.
MinnPost photo by Peter Callaghan
Medicaid Director Cynthia MacDonald, left, and Karen Gibson, Health Care Eligibility and Access Administration Division Director, testifying before House Human Services Finance Committee.
How many enrollees does she expect will lose health insurance? “We don’t know how many at all. No one knows,” Harpstead said. Some who fall off the program might be earning too much now for Medicaid but still need help. The state will direct them to other programs such as MinnesotaCare, which subsidizes insurance for those who make too much for Medicaid but can’t afford private insurance. Finally, there is the insurance marketplace MNsure that helps find policies that benefit from federal tax credits under the Affordable Care Act.

“We hope there are some people in this workforce shortage who have been given great job offers with companies that have commercial insurance and don’t need Medicaid,” she said. “There is some possibility of people who are doing better than they were during COVID.”

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Medicaid, or Medical Assistance in Minnesota, is a partnership between the federal and state governments that pay for it, and the counties that manage the program.

During a presentation Tuesday before the House committee, MacDonald said her staff is working with counties to prepare to process enrollees over the next 12 months, with a one-twelfth share being reviewed each month. It is also planning a publicity campaign and increased direct contacts with current beneficiaries. Dr. Nathan Chomilo, the state Medicaid medical director who worked with the governor’s office to promote the COVID vaccine program, will be involved in this outreach as well.

“Everyone has to be touched within the system,” MacDonald said, a process that federal Health and Human Services Secretary Xavier Becerra compared to the rollout of the Affordable Care Act. Using scenarios developed by the department, MacDonald placed the range of people in Minnesota who will get dropped from Medical Assistance at 15% to 25%. But of those, 25% to 50% will likely be found eligible later and be re-enrolled.

The state estimates the initial removal of covered people would range from 200,000 people to 375,000 people. If a quarter to half are then found to be eligible and regain coverage, the net loss would range from 100,000 to 281,000 enrollees. But it is still traumatic, even for people who end up back on the system to have lost coverage, MacDonald said.

The numbers “highlight that level of reality that happens in the lives of people who count on public programs for their health coverage,” she said. The first drops could hit enrollees July 1.

Because the normal churn of people joining the program and leaving the process was halted, enrollment grew by 330,000 enrollees during the pandemic, MacDonald said. That is a 28% increase in caseload. Nationally, Medicaid enrollment grew by 27.9% to 90.9 million people, an increase Kaiser Family Foundation attributes to the continuous enrollment provision but also to additional states adopting Medicaid expansion under the Affordable Care Act and economic impacts of the pandemic that might have made more people eligible. 

The extra Medicaid matching funds from the federal government had a positive effect on the state’s budget and contributed some to the current large surplus. In the two-year budget ending this summer, the state received or will receive $762 million more for Medicaid. But the cost of the continuous enrollment provision is estimated to be $159 million. The difference of $502 million is money the state didn’t need to put into Medicaid.

These numbers will change some when Minnesota Management and Budget releases its new economic and revenue forecast at the end of this month. The previous forecast predicted that enhanced matching funds would end March 30. Under the new law, however, full payments will continue until July 1 and then step down the extra money each quarter until the end of 2023 when they will end.

Editor’s note: A previous version of the subhead to this story incorrectly stated that nationally Medicaid enrollment grew by 90.9 million people. As the story states, it grew by nearly 28% to 90.9 million total enrollees.