by Yilin Chen
Understanding Insurance Churn
Health insurance churn refers to losing insurance coverage or moving between coverage sources. This is less of an issue in single-payer nations where universal health programs cover individuals’ health expenditures for their entire lives. In the US, however, this happens to approximately a quarter of the US population every year. A Medicaid beneficiary is, on average, covered for less than 10 months out of the year because insurance eligibility is determined by month-to-month income [1].
Increasing coverage has been the emphasis of the Affordable Care Act (ACA). However, insurance churn has many detrimental effects on individuals and the US health system. It causes disruption in care continuity, which is found to be associated with increased emergency department use and fewer office-based healthcare visits [2]. Individuals with Medicaid experiencing discontinuity in insurance coverage were less likely to be hospitalized for chronic conditions and to be screened for breast cancer [3-4]. Churning is not only associated with worse health outcomes, but also adversely impacts finances for individuals and families due to less predictable expenditures and higher out-of-pocket costs. Administrative burden caused by churning is not negligible – studies estimated $400 to $600 for each disenrollment or re-enrollment of a beneficiary, a financial burden that eventually falls on taxpayers [5]. In addition, churning can also contribute to a net increase in healthcare costs when people who experience lapses in coverage re-enroll in Medicaid.
The causes of churning may be voluntary such as accepting a new job, or involuntary, such as coverage eligibility changes in the Medicaid program. Volatility in employment and income makes health insurance churn more prevalent. For instance, the current coronavirus crisis has led to increased disenrollment from original insurance coverage and enrollment in Medicaid. After declines in enrollment in Medicaid and CHIP from 2017 through 2019, total insurance enrollment grew to 78.9 million in November 2020, an increase of 7.7 million from enrollment in February 2020 (10.8%) [6]. This trend shows that insurance churn has increased during the pandemic, leading to heightened concerns about the negative effects of churning.
Existing Policies
ACA Medicaid Expansion
The ACA has made significant improvements in making coverage more accessible, including expanding Medicaid coverage for low-income adults with incomes below 138% of the federal poverty level (FPL) as a state option (Figure 1). Further, the ACA offered subsidies to individuals and families with incomes up to 400% of the FPL who are seeking individual market coverage. These policies have led to decline in both coverage loss and coverage disruptions. For example, a study found that men living in expansion states saw their rate of coverage loss decline from 16% to 10% after the ACA. Among people of color, coverage disruption rates declined from 18% to 13%, and coverage loss rates decreased from 15% to 11%. In addition, for people without chronic illnesses, coverage disruption rates decreased from 21% to 15% after the expansion went into effect, and coverage loss rates went down from 18% to 12% [7].
American Rescue Plan (ARP)
In response to the current COVID crisis, under the American Rescue Plan (ARP), a 100% subsidy for the Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage is now available from April 1, 2021 to September 30, 2021 for qualified beneficiaries who have involuntarily lost their jobs or experienced a reduction in hours. COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year continue to offer employees and their families the opportunity for a temporary extension of coverage in certain instances where coverage would otherwise end. The law also enhances financial assistance for marketplace coverage, including making people who receive unemployment benefits at any point during 2021 eligible for the $0 silver-tier coverage, and helping people with deductibles and cost-sharing. However, the assistance is temporary [8].
More recently, the ARP gives states a new option to extend Medicaid postpartum coverage from 60 days to 12 months, which will take effect starting April 1, 2022 and would be available to states for five years. Studies have shown that new moms who have Medicaid-funded childbirths experienced significant churning in coverage. Among mothers with Medicaid, 55% experience a coverage gap in the six months following childbirth, compared to 35% of mothers with private insurance. This new option can play an important role in reducing rates of churning in new moms [9].
Policy adoption by states
States have the option to adopt and implement these policies. To date, 38 states and DC have adopted the ACA Medicaid expansion and 12 states have not. The Centers for Medicare & Medicaid Services (CMS) released guidance accordingly, and states should engage with providers, community-based organizations, enrollment assistants, and enrollees to facilitate the process, especially during the COVID-19 pandemic.
Changes Medicaid Should Consider
Policymakers should build on the momentum from the ARP’s coverage improvements to make health insurance more accessible, continuous, and stable.
Expand Medicaid 12-month continuous enrollment for all low-income adults
Medicaid should allow enrollees to remain eligible in Medicaid for a continuous 12-month period regardless of fluctuations in their income. Currently, states have the option to provide continuous eligibility for children covered by Medicaid and/or CHIP and Montana and New York have extended this provision to adults using the Medicaid Section 1115 waivers [10]. The nonpartisan Medicaid and CHIP Payment and Access Commission (MACPAC) has long recommended extending 12-month continuous eligibility to adults, as it has the potential to further reduce churn in Medicaid.
Measure and track churns in Medicaid at state level
Collecting and analyzing more detailed state-level information about churning patterns, prevalence and trends, causal factors, and the high-risk churning groups will be useful for policymakers to gain a clearer picture of churning nationwide. The evaluation results could inform future design of policies and procedures to streamline health coverage renewals to minimize churning caused by administrative disenrollment.
Ways to identify churning sub-types are essential. One-way change in eligibility category (e.g., from Medicaid to subsidies or uninsured, or vice versa) or loop change (e.g., starting in Medicaid, leaving for a period, then returning) represent different dynamics and potential impacts. Some researchers have used enrollment data from surveys or claims to study insurance churn-related outcomes (e.g., discontinuity of coverage, duration of enrollment) [11-12].
| Initial state | End state |
| Medicaid | Un-insured |
| Un-insured | Medicaid |
| Medicaid | Subsidized exchange coverage |
| Subsidized exchange coverage | Medicaid |
| Un-insured | Subsidized exchange coverage |
| Subsidized exchange coverage | Un-insured |
Some challenges in tracking churns are reported in states that have expanded Medicaid. For example, some states indicated that integrating their eligibility systems need to be completed before they could perform better analysis of changes and patterns in health coverage. Other challenges included tracking individuals’ movement between coverage programs across states, and the lack of more defined metrics across various data sources. Addressing these challenges will be crucial to understanding the extent of insurance churning in this country.
Ultimately, current policy options can help reduce insurance churn by expanding continuous enrollment, measuring churning, and alleviate harms from “drop-out” by providing subsidies. While none of these policies can completely eliminate churning, these steps would reduce both the prevalence and the harms of insurance churn.
References
- Lehman-white N, Aminzadeh S. Reducing Churn to Increase Value in Health Care: Solutions for Payers, Providers, and Policymakers. https://thehealthcareblog.com/blog/2019/05/15/reducing-churn-to-increase-value-in-health-care-solutions-for-payers-providers-and-policymakers/
- Roberts ET, Pollack CE. Does Churning in Medicaid Affect Health Care Use?. Medical Care. 54(5) (2017): 483–489. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5548183/.
- Swartz K, and others. Reducing Medicaid Churning: Extending Eligibility For Twelve Months or To End Of Calendar Year Is Most Effective. Health Affairs. 34(7) (2015). https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2014.1204.
- Ku L, and others. Improving Medicaid’s Continuity of Coverage and Quality of Care. Washington: Association for Community Affiliated Plans, 2009. http://www.communityplans.net/Portals/0/ACAP%20Docs/Improving%20Medicaid%20Final%20070209.pdf
- Swartz K, Short PF, Graefe DR, Uberoi N. Reducing Medicaid Churning: Extending Eligibility For Twelve Months Or To End Of Calendar Year Is Most Effective. Health Aff (Millwood). 2015;34(7):1180-1187. doi:10.1377/hlthaff.2014.1204
- https://www.kff.org/coronavirus-covid-19/issue-brief/analysis-of-recent-national-trends-in-medicaid-and-chip-enrollment/
- Wen HF, Johnston KJ, Allen L, Waters TM. Medicaid Expansion Associated With Reductions In Preventable Hospitalizations. Health Aff (Millwood). 2019. https://www.healthaffairs.org/doi/10.1377/hlthaff.2019.00483
- Odom SG, and others. American Rescue Plan Act of 2021: COBRA Subsidy, Pension Funding, and Other Employee Benefit Changes. The National Law Review. 11(75) (2021). https://www.natlawreview.com/article/american-rescue-plan-act-2021-cobra-subsidy-pension-funding-and-other-employee.
- Kaiser Family Foundation. Postpartum Coverage Extension in the American Rescue Plan Act of 2021. https://www.kff.org/policy-watch/postpartum-coverage-extension-in-the-american-rescue-plan-act-of-2021/
- Kaiser Family Foundation. State Adoption of 12-Month Continuous Eligibility for Children’s Medicaid and CHIP. https://www.kff.org/health-reform/state-indicator/state-adoption-of-12-month-continuous-eligibility-for-childrens-medicaid-and-chip/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
- Gordon SH, Sommers BD, Wilson I, Galarraga O, Trivedi AN. The Impact of Medicaid Expansion on Continuous Enrollment: a Two-State Analysis. J Gen Intern Med. 2019 Sep;34(9):1919-1924. doi: 10.1007/s11606-019-05101-8. Epub 2019 Jun 21. PMID: 31228048; PMCID: PMC6712155.
- Goldman AL, Sommers BD. Among Low-Income Adults Enrolled In Medicaid, Churning Decreased After The Affordable Care Act. Health Aff (Millwood). 2020 Jan;39(1):85-93. doi: 10.1377/hlthaff.2019.00378. PMID: 31905055.
Incremental Thoughts 