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Unlean Unwinding of Medicaid Continuous Enrollment

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Kate McGovern
November 20, 2023

The application of Lean process improvement principles to public policy is fraught with barriers, both political and administrative. The advantages of lean techniques are evident to those in private industry: to improve quality and reduce waste. In theory, policy makers would share those goals, yet the unlean circumstances persist, particularly in access to health care.  

There is ample evidence that a single payer system is the leanest, most cost-effective way to deliver universal health care. As described in a previous column, other nations have better health outcomes using fewer resources by providing universal access without a maze of public and private insurance coverage.

Through the Lean Lens

Lean practitioners consider anything not of value to the customer to be waste or “muda.” When conducting projects to lean processes, we accept the fact that a certain amount of ancillary work is necessary to provide a product or service. The category of “necessary waste” may sound like an oxymoron, but it is a way to identify which steps are essential compared to those that are muda. For example, there are ancillary activities that support patient care such as cleaning exam rooms and sterilizing instruments. Applying for enrollment in insurance programs does not fall into that category. It is muda because it has nothing to do with medical care.

Identifying the extra steps required to get medical treatment in the United States helps to explain why healthcare spending takes up nearly 17 percent of GDP. Here, the need to have insurance is commonly accepted as necessary waste. Short of a comprehensive reform, however, lean principles still have the potential to root out some of the most egregious bureaucratic waste.

Muda Within the Muda

Numerous levels of administrative hurdles exist within the various types of insurance. The time spent by patients and providers filing insurance claims, attempting to reconcile medical needs with plan eligibility is particularly aggravating muda.  

The Medicaid program which pays for care for low-income Americans has an unlean bureaucracy. While Medicaid’s administrative cost at 5 percent or less of total spending, is roughly a third of the overhead of private insurance plans, there is still much room for improvement. 

Since Medicaid is means-tested, participants must provide annual proof of ongoing eligibility. COVID emergency provisions suspended this requirement, allowing continuous enrollment until March 2023. Since eligibility determination was resumed, more than 10 million people have been disenrolled from Medicaid, according to tracking by the Kaiser Family Foundation (KFF).

Age breakdowns, available for 20 states, found that 4 in 10 of those who were disenrolled were children. Of those who were disenrolled, many were actually still eligible, and may at some point, be reenrolled. In Medicaid administration, this on-again, off-again unnecessary waste is known as “churn.”

The Muda of Churn 

Prior to the emergency authorization of continuous enrollment, churn was common. The eligibility renewal process routinely removed people from the Medicaid rolls. However, 4.2 percent of recipients who were disenrolled were re-enrolled within three months and 6.9 percent within six months.  Resumption of the annual eligibility reauthorization has resulted in return of churn. People may have met the eligibility guidelines, but failed to qualify through the process.

As of November 2023, the KFF Tracker reported that 71 percent of people disenrolled were for “procedural reasons.” They might have had address changes, or they failed to complete the required paperwork to retain eligibility.  KFF focus groups found that “Many participants said that losing Medicaid would be harmful due to loss of access to needed prescriptions and treatments…losing Medicaid would cause a serious decline in their physical and mental health and expressed anxiety at the thought of no longer having Medicaid coverage for themselves or their children.”

Two Lenses of Lean

Churn itself is an administrative waste. The bureaucracy to approve and remove and reauthorize people is unlean. From a broader perspective, establishing a means-tested program that requires people to continually prove their eligibility for access to medical care is not only unlean, but also counterproductive for a healthy society.

The Big Picture

The gaps in access to medical care in the United States have been linked to broader societal inequalities to explain its low ranking in international comparisons. As the Commonwealth Fund’s report noted, “The U.S. population is sicker on average than the populations of other high-income countries, with a high prevalence of chronic conditions like obesity, diabetes, heart disease and respiratory ailments. This disease burden, coupled with insufficient access to care, partially explains the shorter and declining life expectancy in the U.S. compared to other countries.”

While it may sound clinical to describe disparities in life expectancy and infant mortality as unlean, it is a way to examine the human consequences of inefficient resource allocation. While the United States has some of the most advanced medical capabilities in the world, it is counterproductive to utilize such a convoluted method of distribution. The Commonwealth Fund’s report links poor outcomes to broad economic and social policies. A society where everyone can thrive will minimize human suffering, and it will require less bureaucracy. A topic for future explorations: Inequality itself is unlean.     

 Author: Kate McGovern, MPA, Ph.D. is a Lean trainer and practitioner in the public sector. Formerly a professor for the NH Bureau of Education and Training, Kate is currently an instructor at College Unbound. She is the author of A Public Sector Journey to Operational Excellence: Applying Lean Principles to Public Policy.  @KateMcGovern_

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