by Ryan Biehle, Policy Associate
50% of low income Coloradans may move in and out of Medicaid or commercial coverage with financial assistance eligibility over the course of a year. This issue – commonly called “churn” – is caused by income fluctuations and can have big impacts on a person’s health and health care. Churn affects primarily Coloradans below 200% of the Federal Poverty Level, or individuals making less than $1,945 a month or a family of four making less than $3,975/month. The process of switching coverage, especially routinely, is also extremely stressful. Today, the Colorado Center on Law and Policy and Colorado Consumer Health Initiative released a new brief on the issue. It’s time for Colorado to take a closer look at the problem and come together to find effective solutions.
The brief identifies several key challenges of churn and lays out nine recommendations to address the issue and make coverage more meaningful for Coloradans. Give it a full read here: Making Health Coverage Meaningful: Mitigating the Effects of Churn.
Everybody who’s had an hourly job knows your income can change from week to week. And those income swings can be even bigger for seasonal workers on farms and ranches, those working retail over the holidays, ski resort workers, and anybody who is self-employed. These swings mean one month a consumer can qualify for financial assistance on the health exchange and the next they’ll qualify for Medicaid. This causes a whole host of problems:
- Tax Liability: Consumers can’t get financial assistance for commercial coverage if they qualify for Medicaid, so may end up owing money to the IRS if they don’t report the income change.
- Disruptions in Treatment: If they’re in the course of a treatment, say for cancer or continued outpatient care after a hospitalization, they may hit some major roadblocks to getting the care they need. Consumers may suddenly have to find a new doctor that takes Medicaid or is in the commercial plan’s network. Or they may suddenly have deductibles, copays and coinsurance that they weren’t expecting.
- Gaps in Coverage: Gaps in coverage are almost inevitable. Since Medicaid uses monthly income to determine eligibility, if a consumer loses Medicaid she may not have enough time to shop for a commercial plan that will cover her the day after her Medicaid eligibility ends. Research has shown interruptions in coverage can have dramatic effects on a person’s health and their finances, and can result in more hospitalizations.
Those are just a few of the challenges that consumers face. With these in mind, CCLP and CCHI’s brief identifies some important fixes that can be made to mitigate the effects of churn. Several of the key improvements include:
- Continuous Eligibility: Assess the financial impact of extending 12-month continuous Medicaid eligibility to all adults. Colorado recently enacted continuous eligibility for children. Doing the same for adults would enable consumers to better plan their finances and count on their coverage to get the care they need. There may also be some Medicaid savings from lower administrative costs.
- Annualize Medicaid Income Calculation: Instead of calculating income on a monthly basis for Medicaid, use the same annual projected income used to determine eligibility for financial assistance. This will simplify the system for consumers and prevent frequent churning.
- Informing Consumers of their Options: Proper notices and well-trained assistance staff can help consumers understand their options. Consumers need to know they can get coverage on day 1 after they lose Medicaid eligibility. But they also need to know they have to act right away to shop for a commercial plan and avoid a gap in coverage.
- Continuous Care: Adopt transition of care standards to ensure people in the middle of treatment for a condition can continue their treatment with their current provider when moving into a new plan. Additionally, ensure commercial plans contract with most of the essential community providers that also serve Medicaid clients in a particular region. Such standards would ensure that if a consumer does churn, they’re more likely to be able to stay with their current provider.
- Formerly Incarcerated Populations: Work to enroll those leaving incarceration in health coverage, and implement the state law (Senate Bill 08-006) requiring suspension, rather than termination, of Medicaid coverage when somebody enters jail or prison. These strategies will make sure justice-involved individuals can get the care they need while lowering the chance that they’ll return to jail or prison. Connecting these individuals to necessary mental, behavioral, and physical health services can ease the challenges of reentry and prevent a return to the system.
We have an opportunity to keep Coloradans healthier and make the complex system of health insurance much simpler for consumers, providers and payers. We need a determined, collective effort to address churn. We’re urging advocates, state agencies and industry to make this an immediate priority so that consumers aren’t denied the care they deserve.