Medicaid: Issues of Eligibility and Enrollment

Because it’s a means-tested program, Medicaid is often thought of as a public program guaranteeing health insurance for America’s poor.

“But that’s just not true,” Susan Reinhard, head of AARP’s Public Policy Institute, told a panel on Capitol Hill last month. Yes, Medicaid eligibility is based partly on income and assets—so you do have to be poor to get it. But under current federal law  Medicaid is not required to  cover adults—no matter how poor—unless they are pregnant, caring for dependent children, severely disabled or elderly. If you’re an able-boded, childless adult under 65 years of age, it doesn’t matter how poor or sick you are—in many states, you’re out of luck.

Another, equally common misconception is that Medicaid is somehow tied up with federal cash assistance, i.e. is a part of “welfare.” That was true before welfare was overhauled in 1996: back then, people enrolled in Aid for Families with Dependent Children (AFDC), the nation’s major welfare program, were automatically signed up for Medicaid. But when AFDC was eliminated and replaced with the more flexible and less generous Temporary Aid for Needy Families (TANF) in ’96, the Medicaid-welfare link was severed.

Unfortunately, many poor families don’t know this. They assume that because they are not receiving “welfare,” they’re not eligible for Medicaid.

So we have two mistaken assumptions: that all the poor get health care through Medicaid, and that only those on welfare can enroll in the program. Both need to be addressed if we want to improve Medicaid and health care for low-income Americans. 

Expanding Medicaid Eligibility

The simplest way to address the misconception that all poor people receive Medicaid is to make it true. That would mean eliminating the five-category eligibility structure mentioned above and instead setting a uniform income level below which everyone would qualify for Medicaid.

Doing so would insure a great many of people. A 2006 Health Affairs article
authored by the Lewin Group estimates that even if we only reformed
Medicaid so that all adults with income below 133 percent of the
federal poverty line (a low bar) are eligible for coverage we still
would insure 4.7 million more low-income Americans.

For a family of three, 133 percent of the federal poverty line equals joint income of $23,408 a year. Given that a quarter
of the 55.9 million households that earn under $25,000 lack health
insurance, Lewin’s estimate is probably on the conservative side.
Either way, expanding Medicaid so that it was truly universal
low-income health insurance would have a huge potential impact on the
uninsured. (It would be particularly beneficial for adults 55-64 years
old who don’t qualify for Medicaid, a group that’s old enough to need
significant medical care but may not be disabled or live with dependent

As it stands now, states do have some flexibility in expanding Medicaid
coverage. There are currently 21 “optional” eligibility
categories—groups that states can choose to cover beyond mandatory
populations and still receive matching funds from the federal
government. But these groups are generally variations of the five
eligibility categories (for example, nursing home residents, which tend
to be elderly and/or disabled). And while states can apply to the
federal government for waivers that allow them to extend coverage
beyond even optional populations, the federal government doesn’t provide additional funds to help them do so. 

Obviously, expanding Medicaid in the way I’ve described would be very
expensive. But in the context of the new federal-state model that I
outlined in my previous post,
there would be some fiscal wiggle room. The federal Medicare program
would take full responsibility for 7.5 million Medicare/Medicaid dual
eligibles who are currently responsible for a whopping 40 percent of
Medicaid costs. Even though states would probably asked to contribute
something toward the care of these low-income, elderly and/or disabled
patients, it’d likely be significantly less than what they pay now to
cover them under Medicaid, in large part because, coordination of care
would improve if it were to all fall within the Centers for Medicare
and Medicaid. Better coordination of patient care would also help make
a dent in Medicaid’s administrative costs, which constitute about 5
percent of the program’s total costs. And in some cases expanding
access to care actually reduces costs in the long-run expenses.

A 2004 CMS study found
that the system can save millions of dollars when family planning
services are expanded to include more Medicaid patients, due to a
reduction in unwanted, often medically complicated  pregnancies.
Broader access to community-based care can also produce major savings:
the National Council of State Legislatures reports that community
health centers can cut Medicaid costs by 30 percent by regularly
addressing chronic illnesses and thus lowering hospital admission rates.

Expanding Medicaid to more people might also help counter the
misconception that Medicaid is a part of our welfare/cash assistance
system. If an expansion is coupled with community outreach and public
education campaigns, eligible families, would be likely to hear about
neighbors—people who they know are not on welfare—enrolling in
Medicaid. And they would be likely to follow suit.

The Stigma of Welfare

The issue of “welfare stigma” may seem like a fluffy, abstract concept—but it’s very real. Consider a 2002 report
from the Kaiser Family Foundation which discussed the findings of ten
focus groups comprised of low-income, Medicaid-eligible seniors. When
the participants were asked about Medicaid, many of them dismissed the
program as a last-ditch option for the lowest of the low: you have to
have a welfare-level income in order to be able to receive it,” they
said. “Medicaid is for homeless people … super poor [people]. None of
us qualify.” (All of them actually did).

Yet while the participants didn’t like the idea of “handouts,” they
were still very interested in applying for Medicaid once the program
was described to them, and it was made clear that it was a health care
program, and not the flip -side of welfare. When they better understood
the nature of the program, the stigma disappeared.

In 2004, researchers from Georgetown University explored
the association between welfare stigma and Medicaid enrollment through
a larger lens, the National Survey of America’s Families (NSAF), a
large national survey that oversamples poor households in 13 states.
The survey asks several questions about how respondents perceive
welfare—and answers to these questions predicted the probability of
Medicaid enrollment for eligible persons.

More specifically, the authors found that “an eligible survey
respondent who strongly agrees that welfare ‘makes people work less’ is
about 8 percent less likely to enroll than otherwise similar
respondents who disagree with that statement. Similarly, eligible
respondents who strongly disagree that welfare ‘encourages babies
before marriage’ are 8 percent more likely to enroll than respondents
who agree.” Four years earlier,
researchers from the Academy for Health Services Research and Health
Policy surveyed 1055 Medicaid-eligible families and found that 34
percent of them thought the program was only for people on welfare and
26 percent had a negative perception of Medicaid because they thought
it was a government hand-out.

Public outreach probably has a big role to play in eliminating these
misconceptions. When I was in college, I worked with the Boston Earned
Income Tax Credit Coalition to help make sure that eligible workers
received the credit. The coalition was careful to distinguish the EITC
from welfare policies by using the tagline “Earn it! Keep it! Save
it!”—a motto that clearly delineates the assistance as something earned
rather than something given out of pity. While obviously Medicaid is
different in that its benefits are not framed as a refund for working,
the “it’s not welfare!” message is definitely something that could use
some more airtime. 

But maybe the most effective way of distinguishing between welfare and
Medicaid is for states to administer them separately. As it stands
today some states manage Medicaid from their social services office,
the same way it was administered when Medicaid and federal welfare were
connected. In a May report,
the Medicaid Institute of New York notes that in states like
California, Florida, and Ohio, the same state and county agencies
responsible for TANF and food stamps also retain primary responsibility
for processing Medicaid eligibility.

The problem with this set-up is that it perpetuates the link between
cash assistance and Medicaid—a link that stops eligible people from
signing up for Medicaid. Indeed, the Georgetown researcher note that
“states that combine multiple welfare programs under one umbrella, in
an attempt to minimize logistical obstacles to enrollees, may be foiled
by an increase in stigma if Medicaid suffers a loss in reputation as a
consequence of association with other need-based assistance programs.”

The alternative can be found in states like Massachusetts, Louisiana,
and Kansas, where “the Medicaid agency is entrusted with sole
responsibility for organizing and administering the Medicaid
eligibility process, rather than using a system shared with or managed
by the state’s public assistance, human services, or social service
agency.” Here, Medicaid eligibility and enrollment is handled by a
single Medicaid agency, hopefully creating what the Medicaid Institute
calls a “health care front door” to public benefits. 

Proof of Citizenship

There are, of course, more concrete barriers to Medicaid enrollment
beyond shame or a lack of knowledge about the program. One is the
requirement that applicants show proof of citizenship in the form of a
birth certificate, a passport or other official document—a requirement
introduced in 2006 after House Republicans insisted that the Deficit
Reduction Act of 2005, which included many Medicaid stipulations, crack
down on illegal immigrants. (Before the reform, potential Medicaid
beneficiaries had to attest to their citizenship under penalty of

The problem is that many low-income people do not have passports, and
after years of moving from one rental to another, birth certificates
were lost long ago. Thus the citizenship requirement has kept a large
number of eligible citizens from accessing their Medicaid benefits. In
2007, the Kaiser Family Foundation reported that,
during the first nine months after the requirement was put into effect,
Medicaid “enrollment of children fell by 11,000 in Virginia, and 19,000
individuals lost or were denied coverage in Wisconsin. Kansas estimated
18,000 to 20,000 individuals left without Medicaid coverage due to lack
of documentation and delays due to backlogs.” This, despite the fact
that available evidence reveals “that virtually all those who have been
unable to provide the required documentation are U.S. citizens.”

That same year,  the Government Accountability Office (GAO) found
that almost half (22) of the states reporting declines in Medicaid
enrollment at the time attributed the drops to the citizenship
requirement—mostly through denied or delayed coverage for individuals
who “appeared eligible.” Further, GAO reported that while the
requirement was meant to save the system money, the added
administrative burden of the new requirement offset these savings.

Health Care IT

Finally, it’s worth pointing out how IT systems could make Medicaid
enrollment far more efficient. Like so much else in health care, the
Medicaid eligibility/enrollment process takes a lot longer when its
done on paper rather than online. In Oklahoma, a pilot online system is
getting newborns enrolled
in Medicaid before they’re even discharged from the hospital; before
the project began, enrollment could take up to three weeks thanks to
the time it took to process paper work .

Luckily states are experimenting with improved IT services in their
Medicaid programs. The Medicaid Institute notes that in Florida, a
computer system called ACCESS “can be used through any computer with
Internet access, and applications and re-determinations can be filed
around the clock, seven days a week. The state operates regional call
centers through the Department of Children and Families, and relies on
over 3,000 ‘community partners’ to provide local assistance to
consumers. Community partners include aging resource centers, child
advocacy centers, county public health departments, faith-based
organizations, food banks, hospitals, libraries, homeless organizations
and schools.”

Such collaborations enroll people faster while saving taxpayers money:
Florida’s Department of Children and Families workforce was cut by
about 40 percent, from 7,000 to 4,100 since ACCESS was introduced.
Massachusetts’s electronic Medicaid management system allows the state
to cover over one million beneficiaries with a small field staff of 305
eligibility workers.

Most Americans believe that Medicaid provides a guaranteed health care
safety net for the poor; others feel that it’s welfare. Right now it’s
neither—but to make it the former, we need to remove many significant
barriers related to eligibility and enrollment.

2 thoughts on “Medicaid: Issues of Eligibility and Enrollment

  1. Most Americans believe that Medicaid provides a guaranteed health care safety net for the poor; others feel that it’s welfare. Right now it’s neither—but to make it the former, we need to remove many significant barriers related to eligibility and enrollment.