As President Joe Biden told 60 Minutes on Sunday, the "pandemic is over" it is time to get a little more serious about the implications of an end to the Public Health Emergency.
There are a host of waivers that need to revoked, like the three day hospital stay required for a Medicare admission to a skilled nursing facility. Top of mind, however, is the return of Medicaid eligibility determinations.
There are about 89M people enrolled in Medicaid which is about 25M more than pre-pandemic. Of that increment, a portion - our estimate is about 10M - have other insurance.
Since Medicaid is the payer of last resort, MCOs are receiving PMPM payments without associated benefit costs. As disenrollment begins these "all margin" PMPM payments will be eliminated over 18 to 24 months. Disenrollment of people with other insurance will be front loaded in most states as their eligibility verification can be conducted on a "no touch" basis by reviewing things like federal income tax withholding.
The conventional wisdom suggests that redeterminations will raise the uninsured rate, contributing to bad debt and charity care.
However, since labor supply remains tight for now and because some portion of the 25M pandemic-era enrollment has other sources of insurance coverage, we are not likely to see what you might otherwise expect.
The MCOs are making the case that they will convert Medicaid beneficiaries to ACA exchange plan members. It will depend on the state as some believe the law does not permit this practice but there certainly should be some of that.
The way to think about Medicaid disenrollment's impact is that it will first affect the MCOs. After that the largest beneficiary has been the behavioral health sector as states have stepped up to address the significant demand for mental health services; using the enhanced FMAP in some cases to make Medicaid patients more financial viable.
The PPI series for payers by service area suggests hospitals and nursing facilities will be less impacted. The hook up in the PPI series for nursing facilities starting in June suggests longer nursing facility stays and more acute patients, as pricing is pretty inflexible. The easing of labor shortages is probably a factor as well
We do expect the PHE to persist until the end of the year - the White House would love to put the mid-terms behind them before risking an increase in the uninsured - and may last into 1Q. Generally, everyone should be prepared for the gravy train to end in early 2023.