A state-by-state look at the impact of Medicaid determinations

Medicaid enrollees and the health insurance companies that cover them face major disruptions in the coming months as states resume removing people who no longer qualify from the program.

Medicaid redeterminations have been on pause for more than two-and-a-half years to enable people to remain covered during the COVID-19 pandemic. The federal government offered states extra financial support for Medicaid on the condition that they not remove people from the rolls even if their incomes rose above eligibility standards. With President Joe Biden's announcement that he would allow the federal public health emergency to lapse on May 11, states are free to resume redeterminations as soon as April 1.

For Medicaid insurers, the looming loss of coverage threatens a financial shock.

An estimated 15 million of the 91 million people with Medicaid—or 16.5%—are expected to lose benefits once states begin scrutinizing enrollment, according to the Health and Human Services Department. About a third of those will turn to the health insurance exchange marketplaces for alternative coverage, and 65% of adults will qualify for job-based health insurance, according to the Urban Institute.

These figures help explain why the health insurance industry group AHIP, the Federation of American Hospitals and other healthcare organizations have partnered to provide assistance and resources to people who will have to switch from Medicaid to another form of health coverage.

Among insurers, Molina Healthcare faces the greatest financial risk because it is the least diversified, said Duane Wright, a senior research analyst at Bloomberg Intelligence. Nearly 78% of the company’s $31.97 billion in revenue last year came from Medicaid.

The company will lose $2 billion once redeterminations are complete, Wright said. Molina gained 750,000 Medicaid members during the pandemic pause, and expects about half of them to be dropped from the rolls, according to an earnings report issued last month.

“We have operational protocols in place with member outreach in the states that allow through text, phone and mail to help members reestablish eligibility,” CEO Joseph Zubretsky said during a call with investors at the time. “If determined that they are ineligible for Medicaid, but eligible for a highly subsidized marketplace product, we will then 'warm transfer' them over to our distribution channels for marketplace and capture them.”

Centene faces the biggest revenue risk, but also the largest opportunity to offset the losses. The company, the largest Medicaid insurer with nearly 16 million enrollees in 29 states, anticipates 2.2 million members will exit Medicaid when redeterminations are complete.

That would translate to $11 billion in lost revenue, Wright said. Centene projects that 300,000 of those Medicaid members will sign up for its exchange policies, which would help the insurer recoup $4.4 billion, Wright said. The insurer has been expanding its exchange footprint over the past few years, and is now the largest marketplace carrier, with 2.1 million policyholders in 27 states.

Centene has developed an internal tool to project its members’ likelihood of losing Medicaid and is prioritizing outreach to those in the 25 states where its Medicaid and exchange operations overlap, CEO Sarah London told investors last month. “We are working closely with our state partners and our network of community partners in each market to facilitate member transition and coverage continuity,” she said.

Companies such as UnitedHealthcare, Aetna and Elevance Health that have large employer-sponsored insurance businesses will fare better than those banking on exchange transitions because the margins in commercial are higher, Wright said. “They will be able to mitigate more of the hit than some companies that aren’t as prevalent in the commercial market,” he said.

The chart for this story has been corrected. The market share for Medicaid managed organizations was calculated using incorrect total state enrollments.