Safety-net providers could get some financial relief from an uptick in Medicaid enrollment early next year, but it probably won't be enough to offset declines in healthcare utilization or changes to payer mix.
When the COVID-19 pandemic began, many experts predicted Medicaid enrollment would increase dramatically in response to rapidly rising unemployment. But enrollment growth has been driven by states pausing eligibility redetermination processes during the public health crisis. Insurers and state health departments have not seen significant enrollment growth among people who have lost job-based health coverage.
"Medicaid is a counter-cyclical program, so anytime there's an economic downturn, the Medicaid rolls expand," Manatt Health partner Anne Karl said. "We haven't seen that yet to the extent that we expected."
Experts said that could change as the number of long-term unemployed people rises, and more people lose their employer-sponsored insurance. According to the Labor Department, 2.4 million people had been out of work for 27 weeks or more as of Oct. 2. Nearly five million more individuals have been unemployed for 15 to 26 weeks—most of them will join the ranks of the long-term unemployed by the end of the year.
"This is the biggest downturn the economy's had in the existence of the Medicaid program, so it would suggest there would be large numbers of people who've never been on Medicaid and are now eligible," Karl said.
Obamacare's open enrollment period could jumpstart Medicaid enrollment too, said Edwin Park, a research professor at the Georgetown University McCourt School of Public Policy. Even though people can apply for Medicaid or the Children's Health Insurance Program anytime, the Medicaid rolls usually grow after the ACA's open enrollment period because people get screened for Medicaid eligibility when they apply for exchange subsidies. Increased Medicaid enrollment could help safety-net providers whose small margins left them financially vulnerable even before the "big surge in uncompensated care costs," Park said.
It could also make up for some of the disproportionate declines in healthcare utilization that some safety-net providers have experienced—including behavioral health and substance abuse treatment providers—by expanding access to care, said Matt Salo, executive director of the National Association of Medicaid Directors.
But as COVID-19 cases continue to rise, we could see utilization start to drop off again.
"In all likelihood, the worst is coming," Salo said. Many people could say to themselves, "'If I'm not bleeding to death right now, I'm not going to go to the hospital.'"
The financial difficulties could be worse for medical practices than for hospitals because, unlike hospitals, they're earning little additional revenue from treating COVID-19 patients, said Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association.
"What's most concerning is because of the massive job losses as a result of the virus that's going to be this payer-mix shift," he said. "That will be a net negative."
Providers are likely to pay the price as patients move from commercial plans with higher reimbursements to Medicaid, which pays the least of any payer. According to the Urban Institute, Medicaid paid 72% of what Medicare reimbursed in 2016.
But increasing enrollment could lead to better access to care for Medicaid beneficiaries. According to the Medicaid and CHIP Payment and Access Commission, higher Medicaid reimbursement rates did not always cause more providers to take part in the program. At the same time, Medicaid expansion led to an increase in the number of appointments available to Medicaid beneficiaries.
Still, experts said that what's needed most is more fiscal relief from Congress for states and providers because state Medicaid programs have limited resources to cope with increasing enrollment and costs.
"It's really an unsolvable problem. States can't print money and have to balance their budgets," Salo said.