Determining who qualifies for Medicaid if it is expanded is likely to be difficult. Federal law relies heavily on tax and wage data. However, an estimated 13 million people in the U.S. do not file federal income tax forms. Nonfilers are likely to be concentrated in the low-income population who are in turn eligible for expanded Medicaid.[*] Moreover, past filings do not necessarily reflect current income.
Under the Affordable Care Act, states are not allowed to request additional information from applicants unless electronic information from the Internal Revenue Service is either not available or not “reasonably compatible” with what an applicant reports. Medicaid does not define “reasonably compatible,” and some experts believe that forms requesting additional information could require federal approval.
The only other form of income verification readily available to states — quarterly wage data from state unemployment insurance programs — does not include income earned out of state and does not include self-employment income. A review of a recent sample of Oregon’s Medicaid and Children’s Health Insurance Program applicants revealed that current income in the Medicaid database failed to match state employment data for 38 percent of Medicaid recipients “usually due to out-of-date employment data, self-employment income, off-the-books income, or out-of-state income.”
States are also expected to determine whether affordable employer coverage or another public health care assistance program is available to potential Medicaid enrollees using a streamlined application process to determine eligibility. It is not clear how state governments will do this. With the federal law’s emphasis on streamlining the eligibility process, it seems likely that fraud will be a problem, especially since states may face greater caseloads than expected under an expanded Medicaid program. Activists will engage in outreach programs to educate potential Medicaid candidates on how to enroll. The ACA requires a “simplification” of the process used to determine eligibility and enrollment, and this mandate will likely lead to a longer period of enrollment between eligibility checks. More people will remain on Medicaid even if their rising income means they no longer technically qualify. Indeed, up to half of adults earning less than 200 percent of the federal poverty level are projected to migrate between potential Medicaid eligibility and health exchange eligibility in any given year because their incomes will fluctuate.