Medicaid benefits were expanded during the COVID-19 pandemic to cover low-income patients without a need for them to prove their eligibility or to reapply. At the end of March, those benefit expansions expired, and states have begun reviewing the Medicaid rolls to remove those who do not qualify, a process that could create new hardships for millions of Americans.

The mass disenrollment also has potential to affect the U.S. economy in ways that reverberate beyond any given household’s loss of affordable access to medical care. Virginia Tech economics professor Jadrian Wooten explained what effects this change to Medicaid could bring about on both an individual and national level.

Q: What would be the most direct effects for the U.S. of the rollout of Medicaid disenrollment?

“The group most immediately impacted by the Medicaid disenrollment will be those who lose their coverage but still require expensive medical care. Unfortunately, some individuals may be unintentionally disenrolled from Medicaid, despite still being eligible, due to errors in the enrollment process or not receiving renewal notices.”

Q: Is there any way that the disenrollment of those on Medicaid can have economic effects on those who are not insured through Medicaid?

“The people who are removed may find themselves without access to affordable healthcare services, which can lead to untreated illnesses and financial strain for those who need medical care. This could also result in increased emergency room visits and hospitalizations, which are more costly and less effective than preventative care, crowd out other people who need attention as well, and drive up medical costs for everyone.”

Q: What could be the economic reverberations beyond healthcare?

“The loss of Medicaid coverage can have effects that extend beyond just health and wellness. For instance, if people lose their coverage and can't get the medical care they need, they may become less productive at work or miss work because of illness. This could cause a decrease in their earnings, which in turn could affect the economy in various ways. For example, it could reduce spending in local businesses and communities, especially in areas with a high percentage of Medicaid recipients.”

Q: How many could be affected by this process?

“The Department of Health and Human Services estimates that up to 15 million people may be disenrolled from Medicaid, including roughly 6.8 million individuals who will likely still be eligible for coverage. Getting reenrolled in Medicaid can be a time-consuming process that may disrupt families' and individuals' work obligations. It's crucial to keep in mind that more than half of Medicaid beneficiaries are children. While it is the responsibility of their parents or caretakers to enroll their children in the program, cutting off their parents (whether intentional or not) can significantly affect these children as well.”

About Wooten
Jadrian Wooten is collegiate associate professor at Virginia Tech within the Department of Economics. He is the author of the book Parks and Recreation and Economics and of the newsletter Monday Morning Economists. Read more about him here.

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