States are wasting money by slowing down Medicaid reviews, by Sally Pipes

But the emergency has passed. On April 1, state Medicaid programs regained the ability to exclude people who were no longer eligible.

Some states have decided to reevaluate the eligibility of Medicaid enrollees. But other states are deliberately dragging their feet at the request of the Biden administration, costing taxpayers billions of dollars. These delays in the redetermination process are deeply irresponsible. Individuals who are legally eligible for Medicaid should continue to participate in the program and those who are not eligible should not.

The Families First Coronavirus Response Act of 2020 offered states additional federal funding for their Medicaid programs, but only if they agreed not to remove anyone from their Medicaid rolls for the duration of the public health emergency.

As of March of this year, enrollment in Medicaid and the National Children’s Health Insurance Program had reached 93 million people. That’s about one in three Americans under the age of 65. This far exceeds the scope of a program initially intended as a safety net for pregnant women, the blind and low-income elderly people who could not support themselves.

Unfortunately, Congress has effectively given states maximum flexibility to determine their eligibility at their own pace. States have until the end of May 2024 to complete the process, and federal enhanced payments for Medicaid will slowly decline until returning to pre-pandemic standards at the end of this year. Preliminary figures from the federal Centers for Medicare and Medicaid Services indicate that about a third of new determinations result in disenrollment.

This slow process costs taxpayers billions. According to a new study from the Paragon Institute, states could save nearly $12 billion over the next year if they started their new determinations in April and completed them within six months rather than starting in July and taking 12 months. If all states followed this faster timeline, the total savings to state and federal taxpayers could exceed $40 billion.

Deep blue states like California and New York, which are heeding administrations’ calls to slowly audit their Medicaid rolls, will spend an additional $1.3 billion and $900 million, respectively, on coverage for people who are not eligible but nevertheless remain enrolled in Medicaid, according to Paragons estimates.

Other states are moving quickly. Arkansas, for example, began auditing its Medicaid rolls in April and may finish its work soon. If it ends within six months, instead of 12, it will save taxpayers $122 million, according to a Paragons study.

In certain circumstances, a state may determine eligibility through its own resources, such as through automatic income verification and other verification methods.

In other cases, beneficiaries receive a notification, perhaps by mail, email, phone or text message, informing them that they must provide documentation to maintain their Medicaid coverage. Some may have ignored such requests during the pandemic, but could find themselves delisted if they continue to do so now.

Federal officials are railing against these procedural disenrollments, where people lose Medicaid coverage for failing to verify their eligibility. Since April, the Centers for Medicare & Medicaid Services has suspended review proceedings in a dozen states due to alleged failure to comply with federal standards.

This pause costs taxpayers millions more every day. And it’s unwarranted, given that fears that truly eligible enrollees will lose coverage due to paperwork mishaps are overblown. The Florida Department of Children and Families found that more than half of unresponsive enrollees whom the state attempted to contact up to 13 times had not used Medicaid in the past year or did not had obtained no other insurance coverage.

If people eligible for Medicaid lose coverage due to a bureaucratic error, they can easily re-enroll the next time they need health care. And Medicaid coverage is retroactive: it can cover health expenses for the three months before re-enrollment.

It is the height of waste to continue providing costly government benefits to people who, by law, are not entitled to them. State leaders should move quickly to audit their Medicaid programs to ensure taxpayers do not have to shoulder such waste.

Sally C. Pipes is president, CEO and health policy researcher at the Pacific Research Institute.