The COVID-19 pandemic has highlighted and exacerbated longstanding racial and ethnic disparities in health and health care. People of color fare worse than White people across many measures of health and health care, reflecting inequities within the health care system as well as across broader social and economic factors that drive health (often referred to as social determinants of health or as health-related social needs) that are rooted in racism and discrimination. As a major source of health coverage for people of color, Medicaid programs can help to address racial health disparities. Medicaid enrollment has increased during the pandemic, primarily due to the continuous enrollment provision that was implemented during the pandemic and that ended on March 31, 2023. Promoting continuity of coverage as states unwind the Medicaid continuous enrollment provision that has been in place throughout the pandemic can help to mitigate disparities in coverage and care.
The federal government and many states have identified advancing health equity as a key priority for the Medicaid program. This issue brief provides greater insight into how Medicaid can help address racial health disparities by answering three key questions:
- How does Medicaid coverage vary by race and ethnicity?
- How can Medicaid eligibility policies mitigate racial disparities in coverage?
- What other Medicaid initiatives are states pursuing to address racial disparities in health and health care?
How does Medicaid coverage vary by race/ethnicity?
As a major source of coverage for people of color, the Medicaid program helps to ensure access to care and provide financial protection from health care costs. Research shows that having health insurance makes a key difference in whether, when, and where people get medical care. Uninsured people are far more likely than those with insurance to postpone health care or forgo it altogether. Being uninsured can also have financial consequences, with many unable to pay their medical bills, resulting in medical debt. Although employer-sponsored and other private coverage are primary sources of coverage across racial and ethnic groups, Medicaid helps to fill larger gaps in this coverage for people of color, particularly children. (Figure 1). Moreover, over time, gains in Medicaid coverage have helped to reduce racial disparities in coverage, particularly following the expansion to low-income adults under the Affordable Care Act (ACA). However, research also shows that, beyond health care coverage, broader social and economic factors outside the health care system play a major role in shaping health.
How can Medicaid eligibility policies mitigate racial disparities in coverage?
The unwinding of the Medicaid continuous enrollment provision could widen disparities in health coverage. The Families First Coronavirus Response Act (FFCRA) included a temporary requirement that Medicaid programs keep people continuously enrolled in exchange for enhanced federal funding. Primarily due to this provision, Medicaid enrollment has grown substantially during the pandemic and the uninsured rate has dropped, helping to continue to narrow longstanding coverage disparities. The Consolidated Appropriations Act set the continuous enrollment provision to end on March 31, 2023 and states will need to conduct redeterminations for all Medicaid enrollees over the next 12-14 months. An estimated 17 million people could lose Medicaid coverage during the unwinding of this provision. Research shows that Hispanic and Black people are likely to be disproportionately impacted by this unwinding. The end of this provision may increase “churn,” the temporary loss of Medicaid coverage in which enrollees disenroll and then re-enroll within a short period of time. A recent analysis of churn rates among children found that while churn rates increased among children of all racial and ethnic groups following annual renewal, the increase was largest for Hispanic children, suggesting they face greater barriers to maintaining coverage.
State policies to promote continuity of coverage during the unwinding of the continuous enrollment provision could help mitigate coverage losses, including among people of color. Completing redeterminations for all enrollees will pose a major operational challenge due to state staffing shortages and enrollment systems issues. State efforts to provide outreach, simplify Medicaid renewal processes, and provide assistance to help individuals transition to other coverage or complete renewal processes will impact coverage losses and potential impacts on coverage disparities. For example, updating enrollee mailing addresses, boosting eligibility staff capacity, and ongoing processing of ex parte renewals can help to support stable coverage and reduce churn for families. States can also receive approval for temporary waivers through Section 1902(e)(14)(A) of the Social Security Act to facilitate the renewal process for certain enrollees with the goal of minimizing procedural terminations. Finally, some states have applied for Section 1115 demonstration waivers that would help minimize coverage losses, such as by providing continuous eligibility for certain populations.
Adoption of the Affordable Care Act (ACA) Medicaid expansion in the 10 non-expansion states could also help close coverage disparities for people of color. As of 2014, the ACA expanded Medicaid to adults with incomes through 138% of the federal poverty level ($20,120 annually for an individual in 2023). Research suggests that Medicaid expansion is linked to increased access to care, improvements in some health outcomes, and has contributed to reductions in racial disparities in health coverage. However, as of May 2023, 10 states have not yet adopted the Medicaid expansion. In these non-expansion states, 1.9 million people fall in a coverage gap, with incomes too high to qualify for Medicaid but too low to qualify for Marketplace subsidies. Nationally, over six in ten people in the coverage gap are people of color (Figure 2).
Other expansions of Medicaid eligibility could also address racial disparities in coverage and access to care. Medicaid covers more than 40% of births nationally, including more than two-thirds among Black and American Indian and Alaska Native (AIAN) individuals, who have higher rates of pregnancy-related mortality and morbidity as compared to White individuals. Historically, many people who qualify for Medicaid because they are pregnant lost that coverage after 60 days postpartum because Medicaid eligibility levels for parents are much lower than for pregnant people, especially in non-expansion states, and postpartum Medicaid coverage was previously limited to 60 days. However, the American Rescue Plan Act (ARPA) included an option, made permanent in the Consolidated Appropriations Act, to allow states to extend postpartum coverage from 60 days to 12 months. As of May 2023, more than four-fifths of states have taken steps to extend the postpartum coverage period.
Making it easier for eligible people to enroll in and maintain Medicaid coverage may also help close coverage gaps for people of color. In 2021, nearly two-thirds of the 7.4 million uninsured people were eligible for Medicaid but not enrolled were people of color (Figure 3). In August 2022 the Administration released a proposed regulation designed to make it easier for individuals to obtain and retain coverage by further simplifying and streamlining enrollment processes, including by enhancing timeliness requirements for state eligibility determinations, creating simpler eligibility processes for individuals who are 65 or older or have a disability and prohibiting policies that may be enrollment barriers for children enrolled in CHIP. Sustained outreach and enrollment efforts through trusted members in the community also is key for facilitating enrollment of certain populations, including immigrants and people with Limited English Proficiency, who may face added barriers to enrollment.
What other Medicaid initiatives are states pursuing to address racial disparities in health and health care?
Beyond coverage changes, states are focused on addressing racial disparities in health outcomes among Medicaid enrollees. On KFF’s 22nd annual Medicaid budget survey fielded in the summer of 2022, nearly all responding states (41 of 46) reported at least one Medicaid initiative to address racial health disparities in a specified area, such as maternal health, behavioral health, COVID-19, cancer, chronic conditions, or justice-involved populations (Figure 4). Many of these initiatives were related to improving collection of racial and ethnic data, which has also recently been identified as a priority by the federal government, with the Office of Management and Budget (OMB) releasing a proposal to update minimum standards for federal race and ethnicity data collection in January 2023. States also reported initiatives that attach financial incentives to health equity goals or measures that incorporate equity-related requirements into managed care organization (MCO) contracts. Examples of these data collection, financial incentive, and MCO contracting initiatives are described in the Health Equity section of KFF’s 2022 Medicaid budget survey and Appendix Table 1. In addition, states reported initiatives in other areas, including the examples highlighted below:
- Increasing cultural competency of providers and staff: California has developed a Community Mental Health Equity project, which will provide training and technical assistance to county behavioral health departments with the goal of increasing expertise in cultural humility, health equity, stakeholder engagement, language access, workforce diversity, and trauma-informed care. Maryland has developed enhanced cultural competency standards to include in all managed care procurements starting in 2023.
- Establishing dedicated staff positions and other state infrastructure focused on equity: New Jersey plans to hire a Director of Health Equity Operations to spearhead health equity initiatives within the Medicaid agency, including the identification and elimination of health disparities, improvement of data collection, and engagement with communities and stakeholders impacted by health disparities. Washington is requiring all state agencies to develop health equity action plans and has appointed a Health Equity Director within its Medicaid agency. Kentucky reported development of a government branch focused on equity and the social determinants of health.
- Outreach to underserved populations: Hawaii has developed an outreach campaign focused on engaging Native Hawaiian prenatal/postpartum women with mental health and substance use disorder needs in treatment. One of Tennessee’s MCOs plans to deploy targeted diabetes education and social needs screening and outreach starting in 2022 to the AIAN population, due to an analysis mandated by Medicaid that identified disparities.
States may pursue CMS approval of equity-related initiatives via Section 1115 waivers, which provide an avenue to test new approaches in Medicaid. The Biden Administration has emphasized equity as a key goal of Section 1115 waivers, and states have increasingly requested and/or received approval for waivers that aim to advance equity. States may identify equity as an overarching demonstration goal that underlies all or most waiver provisions; for example, Washington’s waiver renewal request identifies that core aims of the demonstration include “build[ing] healthier, equitable communities” and “ensur[ing] equitable access to whole-person care.” Additionally, waivers may include specific equity-related provisions that explicitly address disparities (e.g., by tying financial incentives to equity measures or goals) or provide services or supports to address social and economic factors that drive disparities. For example, states have pending and/or approved Section 1115 requests to:
- Address social determinants of health (SDOH) and related health-related social needs (HRSN). For example, in fall of 2022, CMS approved waivers for Arkansas, Arizona, Massachusetts, and Oregon that authorize evidence-based HRSN services to address food insecurity and/or housing instability for specific high-need populations. CMS also presented guidance about this opportunity in December 2022.
- Coordinate investments in health equity. For example, Arizona’s approved Targeted Investments 2.0 program provides funding that MCOs are directed to use to make incentive payments to providers with the goal of improving health equity for specified populations. New York has requested CMS approval for Health Equity Regional Organizations (HEROs), collaborative bodies that would bring together key stakeholders to conduct regional planning and coordination around health equity improvement.
- Provide pre-release coverage of services for certain groups of incarcerated individuals. In April 2023, CMS released guidance encouraging states to apply for a new demonstration opportunity that would partially waive the statutory Medicaid inmate exclusion policy to allow states to cover services for individuals that are incarcerated in the period immediately prior to their release. This guidance follows CMS’s January 2023 approval of California’s request to cover a package of reentry services for certain groups of incarcerated individuals 90 days prior to release. An additional 14 states have similar pending requests. Both the state and the federal government have noted that, as people of color are overrepresented in the criminal justice system, this waiver will promote equity.
- Require states to evaluate the impact of waiver changes on health disparities. For example, in its approvals of HRSN services for Arkansas, Arizona, Massachusetts, New Jersey and Oregon, CMS requires that the states measure the impact of the approved services on disparities in access, quality, and health outcomes.
Expansions of Medicaid benefits and telehealth may increase access to care for all enrollees, including the disproportionate share of people of color covered by Medicaid. KFF’s 2022 budget survey found many states reporting Medicaid benefit expansions, including benefits that may help reduce disparities. For example, many states are adding benefits to address behavioral health conditions. For example, many states are adding benefits to address behavioral health conditions. Overall rates of mental illness and substance use disorder are lower for people of color compared to White people but may be underdiagnosed among people of color due to barriers in access care; however, people of color have experienced worsening mental health as well as increased rates of suicide and overdose deaths during the pandemic. Beyond benefit expansions, many states have expanded use of telehealth in Medicaid to promote access to care during the COVID-19 pandemic. Increased access to telehealth services could help to address disparities in access to care, although findings are mixed. Although some research finds that telehealth use rates during the pandemic have been highest among Medicaid enrollees and individuals who identify as Black, Hispanic, or multiracial, several states responding to KFF’s Medicaid budget survey noted that telehealth utilization has been higher among White Medicaid enrollees compared to enrollees of color.
Looking ahead, a number of actions at the state and federal levels could further advance racial health equity. These include actions to prevent widening coverage disparities with the end of the Medicaid continuous enrollment requirement and to further narrow coverage disparities through other Medicaid coverage expansions. In addition, improving data collection and reporting practices, and creating incentives and requirements tied to equity can help to address disparities. Proposed rules related to eligibility and to expanding access are in line with the CMS Framework for Health Equity and also aim to address health equity. However, other proposed policies could potentially contribute to Medicaid coverage losses and exacerbate disparities. On April 26, 2023, the House of Representatives passed a Republican debt ceiling bill (HR 2811, the Limit, Save, Grow Act of 2023) that includes a requirement for states to implement work requirements for certain Medicaid enrollees, which could result in significant coverage losses, including for people of color. Finally, while Medicaid coverage can help to address racial health disparities, broader efforts to address structural racism and inequities within and beyond the health care system will also be key for advancing health equity.