Unbiased Analysis of Today's Healthcare Issues

Health reform and health insurance churn

Written By: Jason Shafrin - Oct• 06•16

The Affordable Care Act provides a lifeline for individuals previously “too rich” for Medicaid, but who did not have access to employer-provided insurance.  First, making Medicaid eligibility rules more generous lead to more people just above the poverty line getting access to health insurance.  Second, the “Obamacare” health insurance exchanges offered community-rated, income-subsidized health insurance coverage for people who did not qualify for Medicaid but also did not have have access to an employer plan.

While expanding coverage is useful, patients can change their eligibility for insurance year to year based on changing income and job prospects.   This leads to “churning” where patients frequently move between insurers each year.   How big a problem is this?  A study by Sommers et al. (2016) finds the following:

Nearly 25 percent of respondents in 2015 changed coverage during the previous twelve months—a rate lower than some previous predictions. We did not find significantly different churning rates in the three states over time. Common causes of churning were job-related changes and loss of eligibility for Medicaid or Marketplace subsidies. Churning was associated with disruptions in physician care and medication adherence, increased emergency department use, and worsening self-reported quality of care and health status. Even churning without gaps in coverage had negative effects.

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