What the 2024 Election Results Mean for the Future of Medicaid: A Look Ahead for MCOs
With Donald Trump’s return to office in 2025, Medicaid is set for significant changes. The Trump administration will likely continue to focus on reducing federal spending, limiting Medicaid expansion, and increasing state control. For MCOs, this means tighter budgets, lower reimbursement rates, and more restrictive eligibility criteria. Here's what MCOs can expect and how they can prepare.
Key Changes from Trump’s First Term
During his first term, Trump focused on reducing Medicaid costs and shifting more responsibility to the states. Key reforms included:
Medicaid Work Requirements: States gained the ability to impose work requirements, though legal challenges limited full implementation.
Block Grants and Per Capita Caps: Proposals to cap federal Medicaid funding, giving states more flexibility while controlling costs.
Medicaid Expansion Rollbacks: Trump encouraged states to opt out of Medicaid expansion, reducing access for low-income adults.
What’s Next for Medicaid Under Trump’s Second Term?
In his second term, Trump is expected to push for stricter Medicaid eligibility and more aggressive cost controls. Key developments to watch include:
Stricter Budget Controls and Reduced Funding: More states may adopt block grants and per capita caps, shifting financial responsibility to states and MCOs.
Lower Reimbursement Rates: MCOs will face pressure from reduced reimbursement rates as the administration works to cut Medicaid spending.
Expanded Work Requirements: More states may impose stricter work requirements, potentially reducing Medicaid enrollment and increasing competition for MCOs.
Long-Term Services and Supports (LTSS) Impacts
A critical area of Medicaid that is likely to be impacted by these changes is LTSS, which provides essential services for individuals with chronic health conditions, disabilities, and those who are elderly. Some expected impacts include:
Reduced LTSS Funding: Medicaid cuts may shift funding toward lower-cost Home and Community-Based Services (HCBS) over institutional care.
State Control Over LTSS: More state control could lead to stricter eligibility, limiting access to services.
Expansion of MLTSS: Growing MLTSS programs may improve efficiency but reduce reimbursement rates and care access.
How MCOs Can Prepare
Enhance Operational Efficiency: MCOs should streamline operations with digital tools and improve care coordination to cut costs and boost care quality.
Align with State-Specific Policies: Stay informed about changing Medicaid rules in each state to ensure compliance and competitiveness.
Support Community Engagement: MCOs can partner with local groups to help members meet eligibility criteria, improving retention and reducing churn, especially among LTSS populations.
Address Workforce Challenges: MCOs need to strengthen caregiver networks and invest in workforce development to tackle home care shortages as states seek cost-effective LTSS.
Support Caregiver Programs: MCOs could offer resources, training, or financial support to family caregivers, easing strain on the healthcare system and families.
Navigating the Future of Medicaid
With tighter budgets, stricter eligibility rules, and increased state control, MCOs face a critical need to adapt to remain competitive and financially stable. As eligibility requirements evolve, MCOs will need to innovate to ensure they continue to provide high-quality care, reduce costs, and maintain beneficiary enrollment.
Agilian is here to support MCOs through this transition, drawing on our expertise in Medicaid retention solutions, Redetermination, rate cuts, and more, to help improve care delivery cost-effectively and navigate these evolving challenges.