Here We Go Again: Why Medicaid Recertification Will Lead to Billions Wasted and Millions Losing Healthcare Coverage



On May 11th, the federal public health emergency (PHE) for Covid-19 will expire after being in place for more than three years. When it does, so will the temporary moratorium on recertifying Medicaid recipients. The Centers for Medicare and Medicaid Services (CMS) has called this shift, which will require a massive mobilization of state resources, “the single largest health coverage transition event since the first open enrollment period of the Affordable Care Act” in 2014.

States aren’t ready for the avalanche of work that will be required when the PHE ends. The trouble is, they should be. Because they just went through a very similar situation — one which could prove to be dwarfed by the termination of the PHE.

In March 2020, as part of the omnibus stimulus package housed in the CARES Act, the federal government launched the Pandemic Unemployment Assistance program (PUA), an unemployment benefit specifically for those who were ineligible for traditional UI. As part of this broader expansion of support for Americans who were suddenly out of work because of Covid-19, PUA was intended to be a critical lifeline to non-standard workers like gig and 1099 workers, many of whom became eligible for unemployment benefits for the first time. Those workers make up a growing share of the labor market but face extra barriers to benefits because they don’t have typical W2 pay stubs.

But the implementation of PUA was a disaster. As states scrambled to verify applicants’ income and certify them for unemployment benefits, non-standard workers waited months to receive financial support. Fraud, waste and abuse were rampant, with estimates ranging from $80B to $400B in lost taxpayer dollars and significant ongoing repercussions for state and federal budgets. Many states are still struggling to work through the backlog, even though PUA expired over a year ago, and millions of legitimate workers still haven’t gotten the benefits they qualified for.

When the PHE expires, states that are still picking themselves up after falling off the PUA cliff will fall off another, much bigger precipice. As of July 2020, some 13 million non-standard workers were receiving PUA benefits. Today, many millions more receive Medicaid. If states don’t begin to act now, billions of taxpayer dollars will be lost to massive inefficiencies, and – more importantly – non-standard workers and their families will lose the healthcare coverage they so desperately need.

Is there anything states can do to mitigate this risk? Pilot programs in states like Alabama and Louisiana may point the way forward. Both of those states are adopting emerging technology to help streamline the benefit application process for non-standard workers — cutting down income verification times from days to minutes, and helping families receive benefits faster. It’s not too late for other states to follow their lead and begin piloting the same technology. But they have to act fast. The cliff is coming, and the drop is much steeper this time around. 


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