Millions of Americans are being kicked off their Medicaid health insurance, and the nation’s health insurers are howling. UnitedHealth, the biggest health insurer in the US, says this week that the industry is facing ‘a disturbance’ as states start cutting their Medicaid rolls.

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This follows in the wake of the federal government lifting pandemic-era requirements that states maintain Medicaid enrolment. As millions lose coverage, insurers are worried about how this may affect their bottom line. If only the sickest stay or re-enrol, insurers fear that members may become costlier – requiring more extensive and expensive care.

Perhaps that’s why UnitedHealth CEO Andrew Witty spoke of the challenge of ensuring that ‘utilisation and the rates and everything else stay in perfect synchrony’ in this churn period when packages might be cancelled and resold to new Medicaid customers with unknown health status. That makes it hard to set accurate rates and explains why insurers’ stocks are tumbling. Right after Witty’s comments, UnitedHealth’s price fell nearly 4 per cent, and the values of other large insurers also took a hit.

But the fear goes beyond the immediate blow: these analysts see it as a warning of a bigger problem with the Medicaid programme that serves low-income Americans. The pandemic-era enrolment freeze and subsequent reopening of eligibility checks have sparked far-reaching changes in the programme.

Based on past patterns of enrollee usage, experts estimate that more than 22 million people have lost Medicaid coverage and that millions more renewals remain in the queue in a kind of churn of enrollees that would make cost and rate-setting quite sticky. Just like with Medicare Advantage plans last year, when health plans reported increased usage by individuals, this growth in usage by Medicaid participants may come as a surprise to carriers.

What Medicaid’s future holds, and whether health insurers’ future will look nothing like he expects it to, really is anybody’s guess. One thing no one doubts is that the industry is in for an extended period of turbulence, supplying insurance for many millions of newly poor people while the programme is turned over – upside down, inside out, and probably Thursday as well.

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