Now that we’re just six months shy of 2014, health wonks are beginning turn an eye toward Obamacare’s implementation issues. Attention has been fixed on the exchanges (see also: rate shock) as the October 1 deadline for open enrollment nears. But implementation issues are going to reach beyond state exchanges. The ACA is complicated. Setting it all in motion will be, too.
One issue that hasn’t received the attention it merits—or if it has, I missed it—is the problem of income volatility and the resulting “churn” that’s likely to occur between Medicaid and the exchanges. The health law conditions eligibility for Medicaid and exchange subsidies on income, without overlap between the two. Income fluctuations will lead to changes in eligibility, with consequences for continuity of care. Back in 2011, Benjamin Sommers and Sara Rosenbaum published a substantive analysis of the issue in Health Affairs (gated).
Contra the usual order of things, I’m going to lead with the policy implications, then loop back to the charts and data:
[Churn] is particularly troubling because many of these people will often have incomes low enough to exempt them from the federal insurance mandate, which means that fatigue with frequent coverage changes may lead them to simply stop signing up for insurance over time. This is a problem on two fronts. First, it is uninsured low-income adults who have the most to gain from health reform. Second, this group includes millions of healthy adults whose participation in the exchanges is crucial to robust risk pools. We found that income changes were more common among adults who were younger, more educated, and white—characteristics that correlate with a lower burden of illness. Indeed, these results are consistent with previous findings on changes in Medicaid coverage among adults.
The extent to which the income fluctuations discussed here will lead to actual eligibility and coverage changes under the Affordable Care Act is unclear. Coverage and subsidy shifts will depend on the speed with which individuals report income changes and how quickly this information is processed by states … To assess how large a problem churning actually poses, it would be helpful if states were required to collect and report data on churning in Medicaid and the exchanges once the law takes effect, as is currently done for the Children’s Health Insurance Program (CHIP).
The authors were able to model income volatility over four years (2004-2008) and divvy their observations by income bracket. The top chart shows churn among those below 133% FPL, representing those who’d be Medicaid-eligible. The second looks at individuals between 133-200% of the poverty line, the slice of exchange-eligible population who would be most likely to see their income fall into Medicaid-eligible territory.
Income mobility is quite common across what will become the key Medicaid-exchange market divide at 133 percent of the federal poverty level. Our results show that 35 percent of the adults in our sample would have experienced a change in eligibility within six months, and 50 percent would have experienced a change within one year. Perhaps of even greater concern, 24 percent would have experienced at least two eligibility changes within a year, and 39 percent would have experienced such churning within two years. Beginning in 2014, these income changes may lead to the movement of millions of adults and their families between Medicaid and state exchanges, often within months of their initial enrollment in the programs.
Though they’re imperfect, it’s important to note that there are strategies to address churn. Sommers and Rosenbaum offer five: 1) reduce likelihood of frequent eligibility changes by establishing a minimum guaranteed eligibility period; 2) provide support services for the shift to ease the transition and mitigate disruptions in coverage; 3) align coverage to minimize differences between scope of benefits between the exchanges and the expansion-Medicaid population; 4) align markets and provider networks to promote continuity of care; and 5) monitor accessibility and quality of care consistently across coverage types.
Given the nature of Medicaid and the exchanges, it’s likely up to the states to take initiative in designing buffers against churn. And considering how politically fraught the law still is, I imagine we’ll observe varied experiences with the issue across state lines.