Medicaid enrollment has surged over the last three years, from 65 million people in March 2020 to more than 86 million in March 2023, due to federal incentives that discouraged states from disenrolling people during the COVID-19 public health emergency. But with the expiration of Medicaid’s continuous enrollment provision earlier this year, states are finally beginning to trim their Medicaid rolls of individuals who no longer qualify for the program.

That has led to a misleading narrative taking root: that millions of people are close to losing access to health insurance, exposing them to financial risk and ultimately denying them vital medical care. Some commentators have warned of a “spike in uninsured rates,” while others have claimed that state efforts to remove ineligible enrollees would “substantially increase the number of uninsured.”

These statements don’t stand up to scrutiny. Resuming normal Medicaid operations — and enforcing eligibility rules — does not, and should not, mean that people are left without health coverage.

To be sure, Medicaid enrollment will decline sharply over the next six months. Mainly, those losing Medicaid coverage will have incomes that exceed eligibility thresholds or have experienced a change in family composition (e.g., due to children entering adulthood). Some, too, will mistakenly be dropped because of administrative errors, though robust protections are in place to minimize these disruptions. For these individuals, re-enrollment is typically a simple process, and retroactive eligibility helps ensure that medical expenses incurred during the gap in coverage (up to three months) are paid for by Medicaid.

One key fact, however, is often overlooked: The vast majority of those leaving Medicaid have access to alternative sources of health insurance.

The left-leaning Urban Institute estimates that of the 18 million people expected to lose Medicaid coverage by early 2024, nearly 80 percent will quickly transition to other health plans: 3.2 million children will enroll in the Children’s Health Insurance Program (CHIP), 9.5 million people will gain coverage through an employer and more than 1 million people will purchase insurance on the individual market, often with the help of substantial federal subsidies.

And although the Biden administration’s public statements often emphasize the potential coverage losses from Medicaid renewals, its technical reports tell a starkly different story. Last year, the Department of Health and Human Services quietly released an analysis showing that more than 95 percent of those predicted to lose Medicaid eligibility are expected to enroll in an employer-sponsored health plan, enroll in another government program or obtain heavily subsidized private coverage. Even the 383,000 people expected to lack any of these options can often receive low-cost (or free) care at Federally Qualified Health Centers and myriad state programs for the uninsured.

Even the most pessimistic projections, issued by the Congressional Budget Office, indicate that 60 percent of the coverage losses caused by the Medicaid unwinding will be offset by gains in other forms of coverage. The overall effect on the uninsured rate will be small; the number of uninsured, non-elderly Americans is expected to grow from 23.7 million in 2022 to 25.3 million in 2024 — well within the range of recent historical fluctuations.

Hard data is already beginning to document these trends. Among households earning less than $35,000 per year, the Census Bureau reports that a higher proportion had health insurance in August than in March, before states restarted the Medicaid renewal process.

It’s also worth noting that by the Biden administration’s own reckoning, more than 90 percent of those losing Medicaid eligibility are not poor. Nearly half have household incomes above 250 percent of the federal poverty level, equivalent to $75,000 for a family of four, while about one in four earn more than 400 percent of the federal poverty line.

Medicaid was never intended to be a middle-class entitlement. A leaner Medicaid program would be better positioned to serve the most vulnerable, particularly in areas facing shortages of healthcare providers. Research suggests that increasing Medicaid enrollment may shrink the amount of spending devoted to core needy populations (especially children) and worsen health outcomes for those most reliant on the program.

In short, the longer ineligible people are allowed to remain on Medicaid, the longer resources are diverted away from those for whom the healthcare safety net was designed.

And, contrary to alarmists’ grim prognostications, refocusing Medicaid on its original mission of serving the truly needy won’t cause the uninsured rate to explode — in fact, it’ll barely budge.

Liam Sigaud is a postgraduate fellow on the Open Health Project at the Mercatus Center at George Mason University. His work focuses on state and federal health policy, especially Medicaid.

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