Churning through Children’s Health: Improving Continuity of Medicaid Coverage

For many low-income children and families, “churning” unfortunately does not refer only to converting cream to butter. In the world of social safety net programs, it describes the process of dropping in and out of a program. Research has shown that for health insurance programs like Medicaid and the Children’s Health Insurance Program (CHIP), temporary disruptions in healthcare services can lead to negative health consequences, in addition to high administrative costs. In a recent Health Affairs article, researchers from the George Washington University School of Public Health and Health Services (GWU SPHHS) find that automatic twelve-month enrollments stabilized Medicaid coverage of children for little cost and suggest that it could do the same for adults.

Various factors can lead to the phenomenon of “churning,” including fluctuations in family income for those individuals right at the eligibility cutoff and burdensome paperwork required to maintain certification. As states such as California have learned, the consequences of churning are not just related to health. Over three years, 600,000 children were dropped from that state’s Medicaid program, and it cost $120 million to reenroll them.

When the United States Congress passed the CHIP Reauthorization Act (CHIPRA) in 2009, it encouraged states to increase children’s Medicaid enrollment and retention by adopting policies such as twelve-month continuous eligibility. With this policy change, a child initially eligible for the program could remain enrolled for twelve months without having to reapply or verify his/her eligibility status, avoiding some of the main factors that cause churning.

Past research on continuous eligibility policies typically focused on the impact on total enrollment over time and has shown mixed results. Ku, Steinmetz, and Bruen from GWU SPHHS take the research a step further by looking at the policies’ impact on the average length of enrollment for children, which, after all, is the goal of the policies.

The main variable studied is a continuity ratio created by taking “the average number of children enrolled in Medicaid per month during that year, divided by the number of children enrolled at any point in that year.” The idea is to see how much the enrollment numbers vary over the course of a year.

The data for these continuity ratios are constructed with the Medicaid Statistical Information System State (MSIS) Summary Datamart reports from fiscal years 2008 – 2010. Because they include 2009 (when Congress encouraged states to adopt twelve-month continuous eligibility), the researchers are able to isolate data pre- and post-policy change. The authors then determine which states have adopted the policy change using The Kaiser Commission on Medicaid and the Uninsured surveys.

After controlling for factors like increases in the population eligible for the program, the authors find that states that adopted twelve-month continuous eligibility between 2008 and 2010 saw the largest increases in their continuity ratio, relative to states that adopted the change before 2008 or after 2010 (if at all). Specifically, the average change in continuity ratio for the newly adoptive states was 4.2 percent, compared to 2.5 percent and 3.0 percent respectively. In fact, adopting the new policy between these years was associated with a 1.8 percentage-point increase in the continuity ratio – translating into a significant rise in children’s Medicaid stability. Overall, states adopting continuous eligibility experienced less churn, and children on Medicaid had more stable coverage.

Further analysis of the data suggests that adopting this policy leads to a 2.2 percent increase in Medicaid costs over a fiscal year. This is much more modest than the previous research that predicted an increase of about 10 – 16 percent, indicating that the policy may not be as costly as previously thought. The authors account for the differences in their results by noting that enrollment in the program has improved drastically since prior studies were conducted (they were analyzing actual policy changes, not making projections), and that reduced administrative costs from less churn could offset increases in benefit.

The phenomenon of churning is a reminder that there is more to insuring healthy children than initial enrollment in health insurance programs, and the authors suggest that continuous-eligibility policies can increase a child’s average length of enrollment. The authors note that these policies can also have drastic effects for adults, especially as Medicaid programs are expanded through the Affordable Care Act. The Medicaid and CHIP Payment and Access Commission (MACPAC) has recommended similar changes using Section 1115 waivers, and this research might support stronger incentives or directives to make this a reality.

Feature Photo: cc/(World Bank Photo Collection)