Medicaid: What to Watch in 2024

As the start of 2024, many issues are at play that will affect Medicaid coverage, financing, and access. Medicaid is the primary program providing comprehensive health and long-term care coverage to one in five low-income Americans. The unwinding of the Medicaid continuous enrollment provision started on April 1, 2023, and will continue to be the dominant Medicaid policy issue in 2024. However, adoption of the Affordable Care Act (ACA) Medicaid expansion and other coverage and access expansions, efforts to address social determinants of health and facilitate re-entry for individuals transitioning from incarceration, long-term services and supports (LTSS) workforce, and Medicaid financing are also key areas to watch. Medicaid may not be a major issue in the presidential election, but debate about repeal and replace of the ACA, Medicaid work requirements, and federal financing for Medicaid could emerge as national election issues. In addition, as a major source of coverage for births, Black, Hispanic, American Indian or Alaska Native and Native Hawaiian or Other Pacific Islander populations, some lawfully present immigrants, low-income children, working-age people with disabilities, and people needing long-term services and supports, Medicaid may underpin larger 2024 election issues. At the same time, many states have seen revenues decline recently, which could increase pressure to reduce spending in Medicaid and other programs. This issue brief provides context for these Medicaid issues and highlights key issues to watch in the year ahead.

Unwinding of the Continuous Enrollment Provision

The unwinding of the continuous enrollment provision will be the dominant Medicaid policy issue in 2024. Policies put in place to pause Medicaid disenrollments during the pandemic ended on March 31, 2023. At the start of the unwinding period, in April 2023, Medicaid enrollment peaked at 94.5 million, an increase of 23 million or 32 percent from before the pandemic. As of the end of January 2024, states have reported renewal outcomes for half of all enrollees, including 34% (32.1 million) who have had their coverage renewed and 17% (16.2 million) who have been disenrolled. The share of disenrollments occurring for procedural or paperwork reasons remains high in many states, and amid growing concern over loss of Medicaid coverage for children, in December 2023, federal officials issued new data and additional guidance highlighting strategies to reduce procedural disenrollments for children. The Secretary of HHS also sent letters to nine states with large declines in Medicaid child enrollment, urging them to take up additional policy options to prevent procedural disenrollments. As unwinding continues in 2024, data and experiences on the ground can provide insights about effective strategies to promote continuity of coverage and minimize procedural disenrollments. Overall, the Medicaid enrollment has declined by nearly 10% across states since the start of unwinding in each state, with rates ranging from 32% in Idaho to 1% in Maine.

Medicaid Coverage and Access Expansions

At the start of state legislative sessions, several non-expansion states may consider proposals to adopt the ACA Medicaid expansion. South Dakota and North Carolina implemented the Medicaid expansion in 2023. In the 10 states that have not adopted the ACA Medicaid expansion, nearly 1.5 million uninsured individuals fall into the “coverage gap.” These individuals do not qualify for Medicaid but have incomes below poverty, making them ineligible for premium subsidies in the ACA Marketplace. The American Rescue Plan Act (ARPA) included a temporary fiscal incentive designed to encourage states to newly adopt the expansion that has helped to reignite expansion discussions. While legislative leaders in Florida remain opposed to expansion, Republicans in Georgia,  Alabama, and Mississippi may be open to a non-traditional Medicaid expansion that would include provisions not otherwise allowed under current law (Arkansas, Indiana, Michigan and Utah are examples of states that operate Medicaid expansion through an approved Section 1115 waiver). In addition, the Kansas governor, a longtime proponent of expansion, once again included the proposal in her recently released budget, along with a proposed work requirement.  While some states may be debating expansion, former President Trump announced he would renew efforts to replace the ACA if elected, which could result in reduced Medicaid coverage and financing.

Other state and federal policies may expand coverage for certain groups. Nearly all states (47) have adopted an option to extend postpartum coverage from 60 days to 12 months. The Consolidated Appropriations Act included a requirement for all states to implement 12 months of continuous eligibility for children as of January 2024, and Oregon, Washington, and New Mexico have gone further, receiving waiver approval to provide continuous eligibility for children from birth to age 6. Other states are pursuing similar proposals. KFF analysis shows that continuous eligibility policies help to provide coverage stability for children. At the federal level, the Biden Administration proposed broad regulations to make it easier for individuals to obtain and maintain coverage; and finalized the provisions to help low-income Medicare beneficiaries gain access to Medicaid coverage of Medicare premiums and often, cost sharing, through the Medicare Savings Programs.

In addition to policies to expand coverage, there is likely to be a continued effort to help ensure access to services in Medicaid. Compared to adults with private coverage or Medicare, Medicaid enrollees are more likely to face problems with provider availability and prior authorization; however, because of federal rules that limit out-of-pocket costs, Medicaid enrollees are less likely to report cost-related problems. Pending federal rules aim to help address availability of providers and access in Medicaid by strengthening Medical Care Advisory Committees (to allow for more meaningful engagement from Medicaid enrollees), increasing transparency for fee-for-service (FFS) and managed care payments, establishing national maximum appointment wait time standards for managed care enrollees, and requiring state monitoring related to access and network adequacy for managed care plans. In addition, the Biden administration recently finalized rules to streamline prior authorization processes for Medicaid and other payers. At the state level, efforts to expand the scope of covered services (particularly for behavioral health), implement initiatives to address health disparities and enhance payment rates are key strategies underway to help bolster access to care for Medicaid enrollees.

Social Determinants of Health and Re-Entry

States and the Administration are implementing strategies to leverage Medicaid to address social determinants of health (SDOH). To expand opportunities for states to use Medicaid to address health-related social needs (HRSN) such as housing instability and nutrition insecurity, CMS announced new flexibilities available to states through managed care and through Section 1115 demonstration waivers. New CMS guidance accompanies the Biden-Harris Administration’s release of the U.S. Playbook to Address Social Determinants of Health and HHS’s Call to Action to Address Health-Related Social Needs. As of January 2024, CMS has approved Section 1115 demonstrations in eight states (Arizona, Arkansas, California, Massachusetts, New Jersey, New York, Oregon, and Washington) under the new HRSN 1115 framework that authorize evidence-based HRSN services for specific high-need populations. Approvals include coverage of rent/temporary housing and utilities for up to 6 months and meal support up to three meals per day (up to 6 months). These initiatives also require states to meet minimum provider payment rate requirements for primary care, behavioral health, and obstetrics services to bolster access and to complement (rather than replace) other efforts.

California and Washington received approval and a number of other states have proposals pending for waivers to facilitate re-entry for individuals who are incarcerated.  In April 2023, CMS released guidance encouraging states to apply for a new Section 1115 demonstration opportunity to test transition-related strategies to support community re-entry and care transitions for individuals who are incarcerated. This opportunity allows states to partially waive the statutory Medicaid inmate exclusion policy, which prohibits Medicaid from paying for services provided during incarceration (except for inpatient services). Congress is also considering several re-entry provisions in debate about reauthorization of the SUPPORT Act (major legislation passed in 2018 to address the opioid epidemic) including preventing Medicaid disenrollment due to incarceration, a policy that could help ensure continuity of Medicaid coverage after leaving incarceration.

Workforce Challenges in Long Term Services and Supports and Behavioral Health

Federal and state governments are responding to increased workforce shortages and unmet needs among people who use long-term services and supports (LTSS). The Administration proposed a rule creating new staffing requirements in nursing facilities, requiring state Medicaid agencies to report the percentage of Medicaid spending for institutional LTSS that goes to compensation for direct care workers and support staff, and providing funding for individuals to enter careers in nursing facilities. A proposed rule aimed at ensuring access to all Medicaid services addresses the LTSS that are provided in non-institutional settings, which are often referred to as home- and community based services (HCBS). The proposed rule would establish requirements regarding states’ payment rates for HCBS, among other provisions intended to address access to HCBS and Medicaid services more broadly. States have responded to workforce challenges by increasing Medicaid payment rates for nursing facilities and HCBS as reported to KFF in a 2023 survey; but employment levels remained 10% below pre-pandemic levels in October 2023. As the primary payer of LTSS, pressure to further increase staffing and raise reimbursement rates may fall disproportionately to Medicaid, where financing is shared between states and federal government.

Lack of adequate workforce to meet increasing demands for mental health and substance use disorder services is likely to persist in 2024. States are working to expand Medicaid access to behavioral health services through efforts to build out the behavioral health continuum of care, integrate physical health and behavioral health services, implement mobile crisis services, and expand behavioral health services in schools. However, access depends on the availability of a mix of services and the capacity of the behavioral health workforce. To help bolster the behavioral health workforce, states are implementing several strategies including increasing rates, reducing burden and adding incentives for providers to participate in Medicaid, and extending workforce.

Medicaid Financing

Slowing state revenue growth could have implications for Medicaid policy and spending. Medicaid financing is shared by the federal government and the states. Consequently, economic factors that affect state revenues including inflation, supply chain issues, labor force participation rates, and changes in the stock market have fiscal implications for states. As state legislatures develop FY 2025 budgets, they are facing declining revenues and the expiration of pandemic-era supports from the federal government, that could limit Medicaid investments or prompt proposals to cut Medicaid spending to help maintain balanced budgets. In 2024, declines in enrollment will contribute to lower Medicaid spending growth but the expiration of enhanced federal matching funds will increase state spending. Heading into FY 2025, considerable uncertainty remains about overall Medicaid enrollment and the health care needs of enrollees that retain coverage.  Even though national economic indicators remain strong, pandemic-related supports for households have also expired and families are still struggling to cover costs from record inflation during the pandemic. Broader debates about Medicaid financing could arise during the Presidential election related to efforts to reduce the federal deficit and limit entitlement spending; these are areas of considerable policy differences between Republican candidates and President Biden.

What to Watch

The issues identified in this policy watch could have major implications for Medicaid coverage, financing, and access. As these issues play out, the following key questions will be at the forefront:

• Who will win the presidency and control Congress, which will have major implications for Medicaid policy going forward?
• How will the Medicaid unwinding affect Medicaid enrollment and changes in coverage, including increases in the number of people who are uninsured?
• Will states adopt Medicaid coverage expansions in 2024, including Medicaid expansion or multi-year continuous eligibility for children?
• How many states will advance new initiatives to use Medicaid to address health-related social needs or facilitate transitions from incarceration in 2024?
• How will federal and state efforts to address workforce shortages for LTSS and behavioral health evolve in 2024?
• How will state fiscal conditions and broader economic factors affect Medicaid spending as well as state and federal Medicaid policy?