Questions Linger Over Effects of New Medicaid Eligibility Rules

Several states have gathered statistics showing the early effects of new federal proof-of-citizenship rules for Medicaid beneficiaries, but California probably won’t get a clear statewide picture until next year.

The Deficit Reduction Act of 2006 requires most beneficiaries of Medicaid (Medi-Cal in California) to provide “satisfactory documentary evidence of citizenship,” such as a passport or the combination of a birth certificate and driver’s license. Applicants are required to submit original documents or copies that have been certified by the issuing agency. It’s a whole new layer of bureaucracy intended to prevent ineligible noncitizens from getting subsidized health care.

In California, county governments charged with implementing the new law received their marching orders in June from the state health department.

“It’s a little early right now to start trying to figure out how this will all shake down,” said Michael Bowman, director of public affairs for the California Department of Health Care Services.

“Counties now have their instructions, and we’re expecting counties to come on at varying times over the next several months,” Bowman said. “The larger counties will come on later than the smaller ones, but it’s too soon now even for the smaller ones to see what kind of trends will develop.”

“This whole process is going to take time,” said Cathy Senderling,legislative advocate for the County Welfare Directors Association of California, a not-for-profit organization representing the human service directors from each of California’s 58 counties. The group opposed the regulations, “and we’re still very concerned about how these new rules will ultimately affect people,” Senderling said.

“When Congress enacted the law, we were just shocked that our legislators would implement new rules that we consider unnecessary,” Senderling said.

“There are still some fundamental questions that have to be answered and then the whole new procedure has to be put into place in each county,” Senderling said. “The bigger counties are hiring new staff and training them this fall, as well as retraining existing staff.”

“Probably by this winter or next spring we’ll start to see some numbers,” Senderling estimated.

Why the Delay in California?

California put off enacting the new rules as long as possible, using the six-month cushion to get as many recipients cleared as possible, officials said.

“Out of the 6.7 million Medi-Cal recipients in California, we determined that about 3.5 million would be affected by this new law,” Bowman said. “We figured about that many would have to prove citizenship under the new guidelines.”

“Taking the proactive approach, we’ve matched about two million of those people with California birth certificates,” Bowman said.

California officials figure they’ve whittled the number of those who need to prove citizenship down to about 1.2 million.

“A lot of those people might have been born in Arizona or some other state, and they’ll be able to show that to their county welfare department,” Bowman said. “Those are the kinds of numbers we expect to start coming in the next several months.”

What Other States Are Finding

Earlier this year, health officials in 22 states reported declines in enrollment as a result of the new federal rules. The legislation was supposed to save the federal government about $50 million and state governments about $40 million, but federal and state officials doubt both those projections, and many predict that the new rules will prove detrimental in the long run.

The Government Accountability Office contends that so far around the country, most of the people who have been dropped from Medicaid are eligible, they just can’t prove it.

“And that may turn out to be the case in California, as well,” Senderling said. “That’s what we’re worried about — that people who qualify and should be getting coverage won’t.”

“And then there are a bunch of grey areas, as well, such as foster kids and some [Social Security Insurance] recipients who are exempt” from the citizenship rules, Senderling said. “What happens when their situations change? We’re arguing that once someone meets the requirements — for whatever reason — they should forever be eligible. But we’re not sure how that kind of thing will be interpreted. And there are other questions, as well.”

In a study released in July, GAO surveyed 44 states, 22 of which reported declines in Medicaid enrollment since the rule took effect. Officials in most of those 22 states told GAO researchers they believed eligible beneficiaries were being denied coverage because of the new rules.

The GAO study also found that the new regulations “are likely to cost federal taxpayers significantly more than they generate in savings” because of higher administrative costs.

In another report released this summer, the House Committee on Oversight and Government Reform found that for every $100 of federal money spent implementing the new documentation rules in six states, the federal government saved 14 cents. In those six states, $8.3 million was spent to identify eight undocumented immigrants among 3.6 million Medicaid beneficiaries, for a savings of $11,048, according to the report.

Federal officials did not comment on the reports directly, but CMS spokesman Mark Kahn said the agency is “absolutely committed to assuring access to Medicaid for all American citizens who are otherwise entitled.”

Rep. Henry Waxman, Los Angeles Democrat and chair of the House Oversight and Government Reform Committee, said “States should be able to decide for themselves whether the costs of the current one-size-fits-all documentation policy are in the best interest of their citizens.”

Where’s the Money To Adopt the Rules?

Money to implement the new law has been hard to come by in California.

In the last week of September, when most of California’s 58 county governments’ efforts putting the new law into action were well under way, welfare directors still had not received funding for the new layers of administration.

Although $50 million was designated in the state budget to put this new law into effect, “we still have not seen any money to do any of this,” Senderling said in late September. “We’re told the money’s coming any day, and we believe that to be the case, but it does make things more difficult when the money’s not there.”

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