Millions of people who enrolled in Medicaid during the COVID-19 pandemic could start to lose their coverage on April 1 if Congress passes the $1.7 trillion spending package leaders unveiled Tuesday.

The legislation will sunset a requirement of the COVID-19 public health emergency that prohibited states from booting people off Medicaid. The Biden administration has been under mounting pressure to declare the public health emergency over, with 25 Republican governors asking the president to end it in a letter on Monday, which cited growing concerns about bloated Medicaid enrollment. “This is a positive for states in terms of planning, however, this will come at the cost of some individuals losing their health care,” said Massey Whorley, a principal at health consulting firm Avalere. Millions are expected to be bumped from the program, which grants health care coverage to nearly 80 million low-income people throughout the country.

The federal government will also wind down extra funds given to states for the added enrollees over the next year under the proposal. Many will be eligible for health insurance coverage through employers, the Affordable Care Act or, in the case of kids, the Children’s Health Insurance Program. Advocates have raised concerns about how states will notify enrollees if they are being kicked off the program and what their options are. The effort will be particularly challenging for some of the country’s poorest people, who may not have stable home address or access to internet or phone services to check their status.

If passed, the spending package would allow states to start kicking people off the program as early as April, but require them to notify enrollees first. People who are on Medicaid should make sure their contact information is up to date on their accounts and that they check the mail frequently to keep an eye on their eligibility status as that April 1 date nears, said Robin Rudowitz, the director of Medicaid at Kaiser Family Foundation. “There is likely to be people who fall through the cracks,” she said.

The move will free up additional funds, however, to pay for more stable health insurance coverage for children in low-income households by requiring states to keep those children on Medicaid for at least a year once they’ve enrolled. A push require states to extend Medicaid to new mothers for a 12-month period after giving birth, however, failed to make the cut. The spending package also extends the telehealth flexibilities that were introduced during the COVID-19 pandemic and led health care systems around the country to overhaul their approach to deliver care by smartphone or computer more frequently.

Under the proposal, the restrictions that once tightly governed telehealth care under Medicare will stay loosened through the end of 2024. That will give Congress more time to study telehealth and how widespread fraud is in this program, said Andrew Hu of the Bipartisan Policy Center, a Washington think tank, which has studied the use of telehealth during the pandemic. “We can get some more time to assess where the benefits are with telehealth,” Hu said.

The Senate is expected to vote on the spending bill first, and Democrats are looking for support from at least 10 Republican senators to pass the measure before sending to the House for consideration.

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The U.S. Department of Health and Human Services (HHS) announced approval of Colorado’s Section 1332 State Innovation Waiver amendment request to create the “Colorado Option,” a state-specific health coverage plan that increases health coverage enrollment and lowers health care costs, making insurance more affordable and accessible for nearly 10,000 Coloradans starting in 2023. It is designed to reduce racial and ethnic health disparities by providing new coverage options for Coloradans, reflecting the Biden-Harris Administration’s commitment to advancing health equity. 

“We are thrilled to partner with Colorado in our shared commitment to lowering health care costs and ensuring greater access to quality, affordable care,” said HHS Secretary Xavier Becerra. “The Colorado Option will help thousands more families sign up for health coverage. I applaud Governor Jared Polis and encourage all states to pursue innovative ways to ensure health care is within reach for their residents.”

Section 1332 of the Affordable Care Act (ACA) allows states to apply for State Innovation Waivers to pursue innovative strategies for providing residents with access to high-quality, affordable coverage. Colorado is the first in the nation to adopt this waiver to introduce a new and more affordable state-based health insurance option, and leverage federal savings to support state subsidies to improve affordability and coverage initiatives. Colorado projects that approximately 32,000 Coloradans will gain health insurance under the amended waiver by 2027, which would be an increase of approximately 15% in the individual market.

This 1332 waiver amendment implements the Colorado Option, which lowers premiums and health care costs while making it easier for consumers to compare their coverage options and select the best plan that fits their needs. Starting in 2023, the Colorado Option will be available to all Coloradans who enroll in health insurance plans on the individual market (i.e., not through an employer) and small employers with less than 100 employees. Colorado Option plans will lower health insurance premiums for individuals, families, and small businesses by up to 15% by 2025.

The Colorado Option will operate in tandem with Colorado’s existing section 1332 waiver, a state-based reinsurance program, which is authorized to continue under the amended waiver. The amended waiver is expected to lower premiums by an average of approximately $132 per person per month (or 22%). This is even further than the state’s reinsurance waiver program alone, which has already resulted in statewide average premium reductions of approximately 20% since its implementation in 2020.

“Through this new model, Colorado leverages federal savings to expand affordability and coverage in the state like no other state has done before. The Colorado Option is groundbreaking and a step in the right direction to reduce the uninsured rate, while investing in health insurance coverage affordability and improvements, and advancing health equity,” said CMS Administrator Chiquita Brooks-LaSure. “We encourage all states to consider innovative ways to use section 1332 waivers in the future to expand and improve coverage and lower costs for their residents.”

The Colorado Option will cover all essential health benefits required by the ACA, including many high value services, like primary care, behavioral health, and prenatal visits, at no cost. It will combine standard health benefit plans, required premium reductions, and increased state subsidies for those currently eligible and those not currently eligible for federal subsidies under the ACA to make coverage more affordable. The state’s waiver plan increases competition by establishing premium reduction targets for the Colorado Option and implements better regulatory and programmatic mechanisms as a backstop to ensure providers, hospitals, and issuers meet those targets.

In doing so, the amended waiver will generate savings that the federal government will pass on to the state to implement their waiver (referred to as federal “pass-through funding”). The state will use these savings to implement the amended waiver and make coverage more affordable; this will include providing state-based subsidies through a state program to enhance the financial help available to Coloradans enrolling in coverage, ultimately increasing access to care in the state. As a result, individual market consumers are expected to continue seeing lower premiums, which should attract new consumers while also keeping current consumers enrolled in coverage.

Find more information about the Colorado Option here: Colorado Option website. 

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