Unpacking the Unwinding: Medicaid to Marketplace Coverage Transitions

As Medicaid unwinding draws to a close, millions of people have had to find new health coverage options, many of them through the Affordable Care Act (ACA) Marketplaces. What do we know about how they have fared, and whether state efforts to smooth coverage transitions have been successful?

Background

Following the April 2023 end of pandemic-era continuous coverage requirements, and with state Medicaid agencies resuming eligibility renewals and terminations, more than 25 million people across the country have been disenrolled from Medicaid coverage. For those that no longer qualify for Medicaid (for example, because they are over the income limit), the health insurance Marketplaces are a critical source of affordable coverage. 

Apples to Oranges: Comparing Unwinding Data

Accessible data on unwinding coverage transitions is key to ensuring that Marketplace-eligible consumers are not going uninsured after losing Medicaid. The federal government requires state-based Marketplaces (SBMs) to report data on a monthly basis detailing the number of individuals disenrolled from Medicaid who are determined eligible for Marketplace or Basic Health Program (BHP) coverage during the unwinding period, as well as the number of individuals who select either a qualified health plan (QHP) through the Marketplace or a BHP plan.* 

The latest SBM data published online by CMS includes unwinding activity through March 2024. Since this dataset includes the same metrics for each SBM state, it is useful for researchers looking to evaluate any one metric—such as the percentage of individuals who have selected a QHP—across all SBMs.

However, as CMS notes, variability in this data can occur for multiple reasons: States have different processes for conducting Marketplace and Medicaid eligibility determinations, and many are following different timelines for initiating Medicaid renewals, which can limit the comparabilityaccuracy of data reporting. Moreover, not only did states go into the unwinding with operational differences in their Marketplace and Medicaid programs, but eligibility, enrollment, and data reporting policies within states have evolved in response to frequently updated rules and guidance. As a result, it is very difficult to account for the numerous factors that impact coverage transitions in each state at any given time. 

In addition to the federally mandated data reporting, many SBM states are reporting their own unwinding data, which often provides more current and detailed information than the CMS data. Some states (such as Pennsylvania) have published interactive unwinding data trackers on their websites, while others have relayed updates in less accessible formats, such as SBM board meeting materials. As such, there is no standardized reporting template or system that all SBMs use to report their data, making it challenging to compare metrics across states. 

Integrated versus Account Transfer Eligibility Systems 

How states conduct Medicaid and Marketplace eligibility determinations can impact coverage transitions between the two programs. In some states, Medicaid and the Marketplace use a single system to determine an individual’s eligibility for both programs; in other states, the two entities use separate systems, requiring Medicaid to send a terminated beneficiary’s information to the Marketplace before they can be determined eligible for QHP coverage. 

CMS acknowledges this distinction by breaking down their SBM data into two groups: states with “integrated” systems and states with “account transfer” systems. Currently, 8 SBMs use an account transfer process and 11 have integrated systems. Comparing coverage transition rates between these two groups requires caution because the denominators—the population of people who are ultimately selecting a QHP or not in each type of state—are different. 

In most integrated states, the denominator is Marketplace applications associated with a Medicaid termination. In account transfer states, the denominator is, predictably, account transfers to the Marketplace associated with a Medicaid termination. Since account transfers occur before a Marketplace eligibility determination, many of these consumers may be eligible for an alternate form of coverage, whereas people who apply for Marketplace coverage in integrated states have already been determined eligible for a Marketplace plan and may be more likely to complete QHP selection.

With this caveat in mind, Medicaid to Marketplace transition rates appear quite similar in the aggregated data for integrated and account transfer SBM states. Over 15 percent of consumers in integrated states who were terminated from Medicaid during the April 2023 through March 2024 unwinding period ultimately selected a Marketplace plan (or had one selected for them via an auto-enrollment program). A slightly lower percentage—13.5 percent—of consumers who had their accounts transferred from Medicaid to the Marketplace following Medicaid termination during the same time period selected a plan.

New SBM Programs Show Promising Results

As discussed above, some SBMs are reporting more extensive unwinding data that includes QHP enrollments, demographic breakdowns, and enrollee use of financial assistance. Among the SBMs reporting their own unwinding data, some have implemented new programs to boost coverage transitions by easing administrative and financial barriers that consumers may face. States that have implemented facilitated enrollment and premium assistance programs—including California and Rhode Island—have some of the highest QHP effectuation rates (although because states report data differently, effectuation rates in California and Rhode Island are not a one-to-one comparison)..

In May 2023 California launched an “automatic plan selection” program to streamline coverage transitions by enrolling eligible individuals into subsidized Marketplace coverage after they are terminated from Medi-Cal (California’s Medicaid program). Data published by Covered California (the state’s Marketplace) capturing Medi-Cal transitions from July 2023 through April 2024, show that 33 percent of eligible Californians effectuated coverage into their automatically selected plan. Consumers must “opt in” to effectuate coverage by affirming they want the plan selected for them.

Rhode Island has implemented a similar program to automatically enroll eligible residents into a silver plan through the state’s Marketplace, HealthSource RI, after being terminated from Medicaid. Contrary to California, Rhode Island uses an “opt out” approach in which auto-enrolled consumers have 60 days to disenroll or switch plans. Rhode Island also covers the first two months of premium payments for consumers that are auto-enrolled into a plan with a premium. From May 2023 through June 2024, 25.4 percent of all all Medicaid terminated individuals in Rhode Island have enrolled in a QHP, and over half (50.2 percent) of those who are eligible for premium tax credits have enrolled. 

BHP is a Boon

The two states that have operated a BHP throughout the unwinding—New York** and Minnesota—have seen robust enrollment among those losing Medicaid. In Minnesota, according to the CMS data, 50.7 percent of consumers eligible for the state’s BHP (MinnesotaCare) enrolled. New York’s Essential Plan saw an even higher conversion rate, with 92 percent of eligible consumers enrolling. 

A potential reason for this is that BHP coverage is generally quite similar to Medicaid, making transitions between the two programs less of a hurdle for consumers (especially financially—the Essential Plan, for instance, has no premiums). New York and Minnesota’s state Medicaid agencies also administer their respective BHPs and are used to handling churn between the two programs. Minnesota automatically determines eligibility for MinnesotaCare when an individual is determined ineligible for Medicaid. In New York, someone who becomes eligible for the Essential Plan upon losing Medicaid is auto-enrolled into their previous insurers’ equivalent Essential Plan product. 

In addition to these factors, recently implemented state policies also likely played a role in high BHP enrollment rates. Starting April 1^st of this year, New York expanded Essential Plan eligibility to include consumers with incomes between 200 and 250 percent of the federal poverty level—previously, this population was eligible for Marketplace coverage. MinnesotaCare temporarily waived premiums during the unwinding, easing financial burdens for those transitioning from Medicaid.

Takeaways

Consumers have faced difficulty transitioning from Medicaid to Marketplace coverage prior to the unwinding. In 2018, for instance, only 3 percent of people who lost Medicaid successfully transitioned to the Marketplace. A much higher percentage of people losing Medicaid selected a QHP during the unwinding period, likely due to a combination of factors such as increased outreach and enhanced premium assistance. While it’s difficult to definitively conclude why some SBMs have fared better than others, it’s clear that states that have gone above and beyond to facilitate coverage transitions have seen returns. Despite the many challenges the unwinding brought, it gave states the opportunity to innovate with new programs that serve as a model to ease coverage transitions in the future.

*Though this post focuses on SBM data, data is also available for states that use the federal Marketplace platform (HealthCare.gov).).

**Because New York’s coverage program is now operated under a 1332 waiver, it is technically no longer a BHP.

Special thanks to CHIR’s Rachel Swindle and Elizabeth Lukanen of SHADAC for their assistance with this post.