The Great Unwinding

What happens when the public health emergency associated with COVID-19 ends?

By Colby Schaeffer

The ongoing COVID-19 pandemic has now spanned three years. A lot has changed and will continue to change once society and every industry, especially health care, adjusts to the new post-COVID world. With the pandemic, a federal public health emergency (PHE) was declared, and legislation was then passed that had a major impact on how health care is administered from both an operational and financial perspective. Many temporary provisions were put into place that mostly impact Medicaid but ultimately affect all health insurance payers. As we look ahead to a point at which the PHE ends, those temporary provisions start to end in what many in the industry are calling the “unwinding of the PHE.” This article aims to provide an overview of the flexibilities that have been offered as a result of legislation tied to the PHE, examine the impacts of increased Medicaid enrollment, and assess how the risk profile of covered lives for all health insurance payers has changed.

The PHE that has been in effect because of the virus SARS-CoV-2 (which causes the disease COVID-19, or simply COVID), was declared on March 12, 2020, retroactively effective as of Jan. 31, 2020. Any of you reading this can recall that was a time before masking and hand sanitizers. The first cases were being detected in areas like Washington State and then eventually New York City, where the first major outbreak had occurred in early March. Within six weeks, the feeling in the nation (and world) had completely changed. Businesses were closing down on their own before the shutdowns hit. Shortages on certain goods like toilet paper seemingly happened overnight, like a bad snowstorm was on the brink. COVID cases started to increase exponentially, and epidemiologists were warning of a surge that would cause hospitals to overfill (which happened in some areas). The federal government responded quickly with bipartisan support for the Families First Coronavirus Response Act (FFCRA) which was then signed into law on March 18, 2020. This initial government response forever tied the PHE to how health care coverage is handled.

FFCRA also opened up flexibilities for waivers that states have for Medicaid and Medicare. In Medicare, cost sharing was eliminated for COVID-related services. However, for Medicaid, the law had much larger impacts. FFRCA included a 6.2-percentage-point increase in the federal share of certain Medicaid spending, also known as Federal Medical Assistance Percentage (FMAP). As a condition for receiving enhanced federal match (which reduced state funds needed to run their programs), states had to implement continuous coverage provisions for Medicaid beneficiaries until the end of the month that the PHE ends; this is referred to as the maintenance of eligibility (MOE) requirement. Much of the intent of the extra 6.2% in FMAP was to ease the pressure on state budgets for the expected increase in enrollment due to the MOE and additional Medicaid costs related to addressing the pandemic.. The Children’s Health Insurance Program (CHIP) is also provided with an enhanced match up to 4.34%.

Where does this leave us now? At the time of this writing, the PHE is under its ninth renewal (90-day extensions) and is set to expire July 15, 2022. HHS has previously informed states that at least 60 days’ notice will be provided, which means the end of the PHE will occur July 2022 or later. States receive the additional FMAP bump through the end of the quarter in which the PHE ends, which is slated to be Sept. 30, 2022. Before the omicron wave, many thought the PHE would end in early 2022. Popular opinion seems to have shifted to a later time period, with mid-to-late 2022 being the likely end of the PHE. Any continued uncertainty with the pandemic, such as another wave of cases, is likely to extend the PHE.

As we get close to the end of the PHE though, the focus shifts from case counts and test kits to the virus becoming endemic and moving past the PHE. This puts, front and center, the unwinding of all of the operational and financial elements that have been tied to the PHE since FFCRA was passed. When the unwinding starts, it will radically change the risk profile of Medicaid and all other health payors. Measuring and mitigating against this changing risk profile is where the nature of our profession as actuaries becomes critical. The biggest driver in the changing risk profile is the enrollment growth that has occurred with Medicaid since the pandemic began, as a number of these new members are at risk of losing their coverage.

Enrollment Growth

From February 2020 to November 2021, Medicaid enrollment increased from 64.56 million to 79.16 million people, a massive increase of 22.6% in less than two years.[1] At the time of this writing, additional publicly available data from select states including Arizona, Colorado, New York, Pennsylvania, and Tennessee suggest an average additional increase of 2.1% from November 2021 to April 2022. At an estimated increase of 24.7% over two years, Medicaid enrollment has increased by almost 16 million people. This increase has been notably lower for Medicaid expansion states—the majority of states that expanded their Medicaid program since the passing of the Affordable Care Act (ACA) to cover adults age 19 to 64 up to 138% of the federal poverty limit. Now, if half of the increased enrollment is expected to disenroll, then that means 8 million people will be seeking new coverage or become uninsured over the course of a 12-month period once the PHE ends—a rate of more than 667,000 people per month.

Of these 16 million people, many of whom likely no longer meet Medicaid eligibility criteria, there will be individuals who end up with subsidized Marketplace coverage or have qualified for Medicare, yet some will likely become uninsured, especially in non-expansion states. Many of this growth are non-disabled adults and children, and the hope is that many can qualify for other subsidized coverage.[2] Therefore, states are working with their health insurance exchanges to assist people in getting eligible people enrolled into Marketplace plans. For a vulnerable population such as children, they have additional options through CHIP. Even if they get enrolled in CHIP, which is also administered by states like Medicaid, they might end up having premiums. Prior to the pandemic, in 2019, 4.4 million children were uninsured. Almost half of children now have their health care insured by Medicaid or CHIP. Some estimates[3] suggest that at least 6.7 million children are likely to lose their coverage and are at considerable risk for becoming uninsured for some period of time. Whether they lose their coverage and become uninsured or shift to other coverage, this is a significant shakeup to risk pools.

Another major factor in the growth of Medicaid enrollment is the lack of the usual churn. Due to continued coverage requirements, all of the Medicaid membership that would fall off, or lapse, ends up staying enrolled. This churn is typically 8% of beneficiaries who disenroll and up re-enrolling in Medicaid.[4] With the PHE lasting about 2.5 years, that’s a maximum of 20% of enrollment growth which could re-enroll if they are expected to continue that usual churn pattern.

Because Medicaid is administered by states, how people disenroll from Medicaid and what possible coverage they pick up will vary by state. What operational capacity will state Medicaid agencies have to handle this load of disenrollment, re-enrollment, and new plan navigation?

Did Disenrollment Stop Altogether?

Note that not all disenrollment stopped during the PHE. Medicaid beneficiaries can (1) voluntarily withdraw, (2) move out of a state (or the country altogether, although that’s a bit tough during a pandemic), or (3) unfortunately pass away.

  1. Voluntarily Withdraw.There is not much data on those who have voluntarily withdrawn from keeping their Medicaid coverage. For those who have moved, only 8% of Americans (26.5 million people) moved from one U.S. home to another between March 2020 and March 2021, according to data from the Census Bureau’s Current Population Survey. The 2020 rate and total number of people were the lowest since the federal government began reporting data in 1948.[5] Despite a housing boom and the availability of remote work, the low rate of Americans moving continued in 2021.[6] However, flexible working options and new houses are not the reality for many on Medicaid, where equity issues created a stark difference in how the pandemic impacted people.
  2. Move Out of State. Moving from one state to another is something that still happened for a fraction of Medicaid members. The more important aspect of Americans moving is which states they moved to. Well, there was quite a trend with this. As far as desired states for relocation, most have moved to the South and Vermont.[7] With the exception of the Green Mountain State, the most popular states for Americans to move to are not Medicaid expansion states. This has actually resulted in a net disenrollment, nationally, for those who have moved. It’s fair to say that this wouldn’t move the needle much in terms of overall growth, but it is a factor, nonetheless.
  3. Mortality. Another form of decrement is the circumstance of mortality risk. This has been an unfortunate reality, especially in a pandemic that has taken the lives of almost 1 million Americans. The rate at which Medicaid beneficiaries have been dying has increased for the elderly during the pandemic.[8] While this is a notable statistic one would expect for Medicare, there is a significant number of dually eligible beneficiaries who have both Medicare and Medicaid and receive long-term services and support (LTSS). It is a public misconception where people often think Medicare is the predominant payer of long-term care (LTC) in this country. Medicare pays for LTSS/LTC but up to a specified limit, where only the first 100 days in a skilled nursing facility are covered. Medicaid kicks in when an individual has likely spent down their retirement income to become eligible for Medicaid because of chronic conditions, the need for daily personal care, and increased acute care needs. One bright spot in this is that states which have expanded Medicaid have been associated with reductions in all-cause mortality.[9]

Mapping The Disenrollment Highway

A podcast by Health Affairs (Feb. 25, 2022) had eloquently compared the plethora of eligibility determinations and coverage options that follow to that of a trip on and off the highway. Medicaid members have been on the highway for extended periods of time beyond the normal average durations. Continuous coverage has allowed programs and covered lives to avoid the churn that comes with a lot of Medicaid coverage for transient populations. That lack of churn is like having your vehicle on cruise control, or better yet, to use a metaphor more appropriate for 2022, having your Tesla on Autopilot. Once the PHE ends, so does the highway for a significant number of people. They might end up back on the highway, but once that time comes, they’ll have to enter the exit ramp and navigate themselves through new roads in a different “neighborhood.”

With the unwinding, where do Medicaid members go if they are determined to be ineligible? As mentioned, some might churn, which means they will disenroll only to re-enroll in Medicaid months later. That number could be 10% or more of the disenrollment.[10] Individuals might become categorically ineligible where they had Medicaid coverage during the PHE but then exceeded a maximum age for their eligibility group or then became eligible for Medicare. These categorically ineligible “offramps” are more readily known by both the state and Medicaid members, but this is where communication is vital because such information is known ahead of time. If a Medicaid member is determined to no longer be eligible, Medicaid managed care organizations (MCOs) can help prevent members from losing coverage due to procedural issues (failing to update contact information, failing to supply necessary documentation to substantiate eligibility, etc.) and connect individuals to alternate coverage (such as Marketplace).

For those who are eligible for marketplace plans, new provisions via the American Rescue Plan Act (ARPA) allowed for premium subsidies in 2021 and 2022. Under baseline rules, premium tax credits are only available to taxpayers with household incomes between 100% and 400% of the federal poverty line (FPL). ARPA eliminated the upper income limit for eligibility by allowing more individuals to qualify for credits, and it increased the amount of the premium tax credits for all income bands, with the cost of premium limited to 8.5% of household income. States without Medicaid expansion will likely have a higher proportion of members disenrolling and then having the option to enroll in Marketplace plans that have premium tax credits.

The exchanges, offramps, onramps, and local roads vary for every single state. For most states, their highest share of enrollment (30-60% give or take) growth since the start of the PHE is tied to the Medicaid Expansion population. Many children could disenroll from Medicaid but then become eligible for CHIP. Others might still even be eligible for Medicaid, but their papers aren’t filled out correctly (or filled out at all) when eligibility redeterminations occur. Perhaps they didn’t have internet access? Perhaps they didn’t receive redetermination letters because their mailing address isn’t updated. Without these key communications, a large swath of the population will not have the right guidance regarding their health care coverage options. This is comparable to being “off the highway” and without a map in that strange neighborhood. As you can see, every state has its own roadmap for disenrollment, and the unwinding of PHE doesn’t stop there.

What else occurs when the PHE ends?

The end of continuous coverage and the MOE has been mentioned, as well as the additional FMAP for both Medicaid and CHIP. However, a number of other provisions are tied to the PHE. States have used various authorities via Section 1115 and 1135 waivers, as well as HCBS-specific flexibilities available under 1915(c) waiver Appendix K, all to do the following:

  • Expand coverage for COVID testing and related services to uninsured individuals
  • Accept self-attestation for new Medicaid enrollment applications
  • Apply less restrictive requirements for non-MAGI eligibility groups
  • Expand definition of temporary absence to establish residency for individuals temporarily out-of-state due to emergency
  • Extend period to verify immigration status
  • Waive CHIP waiting period
  • Extend hospital presumptive eligibility
  • Extend redetermination period in CHIP
  • Waive requirements for timely processing of enrollment applications
  • Extend timeframe for taking final administrative action on fair hearing requests on appeals due to emergency
  • Eliminate deductibles, copays, coinsurance, and other cost sharing
  • Eliminate, waive, or suspend enrollment fees or premiums
  • Add new optional benefits such as parents as paid caregivers and meal delivery
  • Adjust existing benefits
  • Waive prior authorization requirements
  • Make exceptions or changes to preferred drug list
  • Allow early refills for most medications and increase maximum supply or quantity limit on certain drugs, such as 90-day fills (instead of 30-day)
  • Have payment parity for some telehealth services
  • Allowed for licensure flexibility with telehealth providers
  • Increase state plan payment rates, provide directed payments, or modify other reimbursement structures
  • Allow for increase in number of nursing facility bed holds
  • Temporarily increase the payment for COVID-19 vaccines
  • Modify provider qualifications

That’s a long list of temporary provisions and much-needed flexibility during a pandemic where there have been issues with access, low contact, health equity, and technology gaps. While that’s a Medicaid-specific list, there are other temporary PHE provisions that have impacted health care, insurance, and social welfare such as double SNAP benefits, supplemental grant funding to TANF, and extended paid family leave, just to name a few.

As the PHE unwinds, the operational burden on states shifts into high gear. This follows a two-year-plus period where state employees have already been exhausted by the pandemic and might feel overworked. On top of that, the eligibility redetermination process will be new to many state staff. The labor market has made it tough for employers to hire, which means attracting talent to join state governments to support redetermination efforts is tough. Furthermore, new staff aren’t even trained for such tasks let alone dealing with this massive disenrollment. Workforce capacity is a major challenge and an aspect of operational readiness for this unwinding where they feel least prepared. This opens up Medicaid agencies to a number of risks. There could be a heavy volume leading to considerable backlogs in call centers. In addition to redeterminations of existing enrollment, there will be new member applications. States need to be cognizant of when there is peak churn. (Think about autumn with the start of the school year.) To help states, CMS developed an issue brief to highlight effective and practical strategies to improve state outreach, enrollment, and renewal activities.[11]

It’s not just about the states being ready to handle the unwinding, though. Medicaid beneficiaries—the ones that are often underserved or with critical care needs—are those that need to be ready. This is why member communication is so critical for ensuring they are ready to respond to eligibility redetermination requests. States can be proactive with address and phone number verification. As states embark on outreach campaigns by using social media, messaging via MCOs, and other communication methods, a key focal point would be to ensure accurate and current member contact information is maintained.

As all Medicaid beneficiaries need their eligibility redetermined, states are taking various approaches to determine the order in which this occurs. For instance, beneficiaries who have not renewed their eligibility might get flagged. Certain eligibility categories might be given preferential focus because of the likelihood that there are more ineligible members, such as Medicaid expansion populations. Most importantly, how can states facilitate other health coverage support for those who actually don’t have any other options in lieu of Medicaid? This will likely include Marketplace plans as a likely point of entry in the disenrollment-to-enrollment process—however, in states without Medicaid expansion, many adults (mostly parents and children who have aged out of Medicaid) are likely to fall into the coverage gap and become uninsured.

CMS has provided guidance for Medicaid agencies to redetermine eligibility for all beneficiaries over the course of 14 months. However, there is serious risk to meeting that deadline with the increased backlog. One way to mitigate this risk is by conducting an enhanced ex parte renewal. This is done when there is available information such as SNAP, Social Security disability, or foster care placement. If such data points indicate there is eligibility then an individual may be renewed. If such information is insufficient to determine continued eligibility, the state must send a redetermination letter. Given the external data sources, ex parte is a useful approach to reduce administrative burden on states and ensure renewed coverage for those that are eligible.

Financial Ramifications

While member disenrollment patterns and operational considerations are high on the list of needs, having a firm grasp on the financial impact is of concern to actuaries. This goes beyond the 6.2-percentage-point FMAP increase that was mentioned.

States where Medicaid financing is primarily managed care end up being more at risk given that capitation rates must be paid out, regardless if a Medicaid beneficiary is utilizing health care services. While this is normal, the increased risk is due to a higher proportion of non-utilizers than would be expected. This is because capitation provides for a fixed amount per member per month for MCOs to handle all financial risk for their members. It is a form of risk mitigation that can lead to more predictable state budgets, especially in periods with a stable environment. Large swings in enrollment can impact per capita costs in ways that may be hard to predict. State decisions around priority populations and the speed at which redeterminations and subsequent terminations occur can also impact per capita costs. If no claims exist, then an MCO still receives all the money received for that member, hence the increased risk if the number of non-utilizers is higher than expected. Note that nearly all states do have some form of partial risk treatment for managed care, where risk corridors and non-risk mitigation of certain services is prevalent with Medicaid programs.

As the pandemic hit, state Medicaid actuaries across the country were building out models to try to predict caseloads and budgetary impacts. Additional work within the industry was focused on risk mitigation strategies and capitation rate adjustments. One-time retrospective risk corridors were allowed to be put in place where states did not have such downside protection. Some states implemented retrospective capitation rate adjustments to reflect unforeseen programmatic changes that were not known at the time the original rates were set. These included government shutdowns and the aforementioned waiver changes that were put in place to allow for “COVID flexibilities”. The onset of the pandemic resulted in dramatic underutilization of services during the Spring to Summer months of 2020. While utilization appears to have returned close to historic patterns, there remains uncertainty on what that new normal looks like, given health care is consumed dramatically differently in this country than over two years ago. Additionally, it is unknown what the impact of deferred and forgone care have had on the early detection and maintenance of chronic and critical conditions, or the prevalence of long COVID.

Just as many states had adjustments made to their capitation rates to reflect acuity adjustments and utilization shifts caused by the onset of the pandemic, similar decisions present themselves during the unwinding. While it can vary by type of Medicaid population, there is strong opinion and supporting evidence that newer enrollees who are likely to be disenrolled have a lower risk profile than those who would remain on Medicaid after eligibility redeterminations are done. This change in mix of risk profile puts upward pressure on the capitation rates. Furthermore, those COVID flexibilities go away and COVID is presumed to become endemic. Like influenza, where there are bad seasons and not-so-bad seasons due to the changing variants, many signs point to COVID following a similar pattern once it becomes endemic. One key difference is that there is a cold and flu season during the winter months. COVID has shown that it is not only much more contagious, but it is also more resilient to warmer temperatures than flu. Actuaries need to be mindful of the base data they use and how much COVID experience is reflected in it versus what they would expect in the projection period.

For acuity impacts of the shifts in enrollment, actuaries have tools such as durational analysis which can be leveraged. This is a method of measuring PMPM differences by duration of enrollment. Actuaries can examine the changes in durational analysis before and after the PHE and align the cohorts of members with those that are expected to disenroll. This will give an indication on the average expected cost not only after the PHE but during the unwinding. This is important as there will be rating periods where the unwinding of the PHE is happening, so it’s not as simple as pre-PHE versus post-PHE. This is helpful for both managed care populations and FFS and is a useful analytical method for all payers, and not just Medicaid. These shifts in enrollment and per capita cost not only impact capitation rates and state budgets, but also impact the revenue for MCOs (lower volume of members and payments), risk score measurement (percentage of members scored), and quality measures (large shift in measured population).

This leads to even more questions. What will be the new normal for how COVID tests and vaccines are utilized? What is the impact of long COVID, and how do those individuals’ risk profiles differ from others? What role will telehealth continue to play; will it supplement and add to overall utilization or supplant it and change the mix of services? What else will change in the mix of services; for instance, are behavioral health services on the rise? How will the underutilization that has been observed, which ultimately includes deferred services, have an impact on health outcomes? For health actuaries who don’t work on Medicaid, how does this spill over into other payers? For providers, how does this impact their expected revenue given shifts in reimbursement? These are just several of many questions that health actuaries, and especially those in Medicaid, face when it comes to pricing, reserving, and forecasting in the next couple years.

Health Policy Overlays

When the PHE covers three-plus calendar years, there is bound to be some changes in health policy. Certain states like North Carolina transitioned from FFS to managed care during the pandemic. Other states moved forward with Medicaid expansion. There’s also federal legislation beyond FFCRA that has had an impact. While not as explicitly tied to COVID, additional HCBS funding is allocated through ARPA, one of the COVID stimulus pieces of legislation. Medicaid actuaries, especially those working with MLTSS programs, likely had to amend their capitation rates to account for these additional monies. To add further volatility on top of the uncertainty of the PHE, this funding is temporary for three years until March 2024. The Congressional Budget Office initially estimated this funding to be $12.7 billion.[17]

At the time of this writing, Build Back Better (BBB) has been in a holding pattern within the Congress. It does not appear that it is completely dead in the water, and if some of the simpler elements of it for health care were to proceed and the bill was passed in time, then the unwinding of the PHE would change for Medicaid. With how it has been proposed, it would decouple the continuous coverage requirements from the PHE and instead establish a known timeline for phasing out the additional 6.2% FMAP. Whereas current guidance requires states to redetermine eligibility for Medicaid beneficiaries over the course of 12 months, BBB would make this a nine-month process. If anything, the precarious situation with BBB merely adds more uncertainty.

Macro Shifts

National economic, demographic, behavioral, and technology shifts have quickly unfolded with the pandemic. The rate of technology adoption forced upon health care with the use of telehealth has been impressive. This massive acceleration in the use of telehealth is evident from the increase in 11% to 46% of US consumers using telehealth from 2019 to 2021.[18] When examining the new risk profile post-PHE, one cannot ignore the impact that telehealth has had on the health care industry. It grew out of necessity and settled as a useful tool to triage patients, avoid COVID exposure, and more efficiently manage patient scheduling. Some services such as psychiatry, counseling, and substance use disorder treatment are also a natural fit because of the focal point of communication between provider and patient. However, telehealth can still have its limitations given the dependency on technology which does not help objectives for health equity, especially in Medicaid.

Other macro shifts have already been noted with behavioral health, people relocating, and long COVID. With the “Great Resignation,” the mentality of labor has dynamically changed. That is likely coupled with the noted behavioral health impact, and it undoubtedly leads to an increased prevalence in individuals leaving the workforce or being underemployed. This would set a new benchmark for expected Medicaid enrollment and cause shifts between other payers when examining the pre-PHE to post-PHE period.

When it comes to economic impacts, there is no greater pressure on economics than inflation. Whether it is caused by the shock to supply caused by COVID backlogs, federal monetary policy, or the geopolitical climate as all countries deal with the pandemic, inflation is undoubtedly here. As of January 2022, annual inflation is at 7.5%, which is the highest that it has been in 40 years.[19] The overall cost of goods and services increasing ultimately puts pressure on health care costs, even if indirectly due to the prices that health care entities pay for other services. This creates more unit cost pressures for provider reimbursement.

Now What?

To conclude this overview is difficult given the continued uncertainty and the number of risks that present themselves. This article was meant to be an overview of the impacts of the unwinding of the PHE, with a focus on Medicaid because it is more impacted than other health care coverage. The number of risks and considerations brought forth in this article are not all-inclusive. Hopefully, it will lead to new thought analysis and modeling considerations for health actuaries and be informative to those that are not in the health care space.

Colby Schaefer, MAAA, ASA, is chief actuary at Arizona Health Care Cost Containment System, the Medicaid agency for the state of Arizona. He can be reached at Colby.Schaeffer@azahcccs.gov or crs245@gmail.com. Opinions contained in this article are his and his alone and do not reflect the views of the state of Arizona. He also wishes to acknowledge Julia Lerche and Jennifer Gerstorff as well as Bonnie Punch, Erica Johnson, Steven Wander, and Maureen Sharp for their draft review and feedback. 

So Many Questions on the Changing Risk Profile

Those are a lot of questions! To pick a few, let’s examine deferred care, long COVID, and behavioral health.

Deferred Care

Per a research piece by the Society of Actuaries (SOA),[12] there was a 13% drop in utilization of hospital services for cancer, a 51% drop in preventative well visits, a 35% drop in diabetes mellitus, and even a 26% drop in screenings and follow-ups. This is the annual change from the period of March through June 2019 as compared to the same set of months in 2020. While this was a one-time effect, many parts of the country and swaths of the population have continued to underutilize services. Still, forgoing services for several months or a year could lead to negative consequences, such as poorer health outcomes, which ultimately means higher health care costs in the long run.

Long Covid

What has been studied more and more throughout the second year of the pandemic has been the post-acute sequela of COVID, colloquially known as “long COVID.” The frequency in which individuals get long COVID is uncertain. A number of studies have shown a significant percentage of patients have symptoms that persist for many weeks after initial infection. For instance, a University of Washington study had found that 30% of people who had COVID were still experiencing symptoms six months later.[13] A study by Imperial College London showed almost 15% of patients who had COVID still reported three or more symptoms after 12 weeks.

There is a difference in the long COVID risk potential based on vaccine status where vaccinated adults have shown a lower chance of developing symptoms. It is estimated that more than 140 million Americans have had COVID.[14] So even at the low-end estimate of 10% for likelihood of long COVID, that means millions of people in the U.S. and the world are “long-haulers,” facing chronic symptoms that can impair their ability to work, exercise, or lead a normal life. Why is this a key aspect of the unwinding of the PHE? With the risk profile changing due to the large volume of member movement between different payers (mostly leaving Medicaid), it is critical to assess what risk is left behind and what new risk is joining a cohort of insured individuals.

The SOA is looking at the cost of long COVID by examining the cost effects of all COVID patients in a pre/post claims study. The objective of the study is to look at costs broken down by category of service as well as different acuity levels of patients.

In a January SOA Medicaid subgroup call, the cost of long COVID became a heavily discussed topic. Although it is a small sample of a 100+ Medicaid actuaries, a poll was presented to attendees to assess the relative cost of patients with long COVID compared to the average health plan member (with light or non-existent COVID symptoms). In that poll, 74% of respondents indicated a cost relativity of least 10% higher for those with long COVID, with half of those respondents indicating that costs are likely 50% higher. Answering this question is not that simple because data is limited and tough to discern through just claims and encounter data that Medicaid actuaries have been looking at the last two years.

Behavioral Health

Earlier in the pandemic, there was a piece compiled by McKinsey that stressed the importance of behavioral health and the adverse effects that the pandemic would have on the future of Americans’ state of mind.[15] One example that the authors gave was the cost of treating a diabetes patient. If that patient had depression, then their average expected cost is almost $20,000 higher than for a patient without depression. McKinsey cited factors such as medical complications, reduced access to preventive care, and challenges with illness self-management as potential drivers. They also stated that behavioral health conditions affect about a quarter of Americans each year, and this costs the economy about $900 billion annually. One year after the onset of the pandemic, McKinsey projected an additional $100 billion to $140 billion in behavioral health costs, an annual increase of 11% to 16%.

There are a number of mixed factors, though. Under-utilization of services can occur (again, the issue of deferred care). Mental health checks are the type of care that is more often ignored. If an individual doesn’t have ample health insurance coverage (underinsured rather than uninsured), then they might forgo seeking help. At the end of 2020, a survey by the U.S. Census Bureau had shown that the percentage of American adults with indicators of anxiety or depression dramatically increased to 42% from just 11% the year prior. Similar data from CDCx showed 42.4% in December 2020 compared to 29.0% as of June 2021. The latest December 2021 figures show 32.1%, so although there is improvement, COVID is clearly having a lasting impact on the mental health of American society.

It’s reasonable to conclude that these mental health impacts will have a lasting effect beyond the unwinding of the PHE.


[1] https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/index.html

[2] https://www.medicaid.gov/federal-policy-guidance/downloads/sho22001.pdf

[3] https://www.google.com/url?q=https://ccf.georgetown.edu/2022/02/17/millions-of-children-may-lose-medicaid-what-can-be-done-to-help-prevent-them-from-becoming-uninsured/&sa=D&source=docs&ust=1647034139252528&usg=AOvVaw3W8JAAK_m2jQGmH7Q23Ayj

[4] https://www.macpac.gov/wp-content/uploads/2021/10/An-Updated-Look-at-Rates-of-Churn-and-Continuous-Coverage-in-Medicaid-and-CHIP.pdf

[5] https://www.pewresearch.org/fact-tank/2021/12/16/in-2020-fewer-americans-moved-exodus-from-cities-slowed/#:~:text=Only%208%25%20of%20Americans%20%E2%80%93%2026.5,began%20reporting%20data%20in%201948

[6] https://www.reuters.com/business/five-ways-us-housing-market-stood-apart-2021-2022-01-20/

[7] https://www.usnews.com/news/best-states/articles/2022-01-03/americans-moved-south-in-2021-a-study-finds

[8] https://www.americanprogress.org/article/pandemic-economic-crisis-wake-call-state-medicaid-expansion/

[9] https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(21)00252-8/fulltext

[10] https://www.kff.org/medicaid/press-release/new-analysis-of-historical-rates-of-medicaid-enrollment-churn-sheds-light-on-the-implications-for-the-end-of-the-continuous-enrollment-requirement-tied-to-pandemic-funding/

[11] https://www.medicaid.gov/state-resource-center/downloads/kids-coverg-outreach-enrolmnt-retention-strategies.pdf

[12] https://www.soa.org/globalassets/assets/files/resources/research-report/2020/covid-19-return-stages.pdf

[13] https://healthlibrary.uwmedicine.org/Library/DiseasesConditions/Adult/Travel/6,1650612259

[14] https://www.beckershospitalreview.com/public-health/43-of-americans-have-had-covid-19-cdc-estimates.html

[15] https://www.mckinsey.com/industries/health care-systems-and-services/our-insights/covid-19-and-behavioral-health-consequences-

[16] https://www.cdc.gov/nchs/covid19/pulse/mental-health.htm

[17] https://www.cbo.gov/publication/57056

[18] https://www.mckinsey.com/industries/health care-systems-and-services/our-insights/telehealth-a-quarter-trillion-dollar-post-covid-19-reality

[19] https://tradingeconomics.com/united-states/inflation-cpi

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