Losing or dropping health insurance coverage for unforeseen reasons is known as “churning.”  Churning affects the continuity of care between the doctor and patient, may lead to costly emergency room visits instead of less expensive primary care visits, and is an administrative nightmare for insurers.

The Affordable Care Act added another wrinkle.  Receipt of subsidies on the federal exchange is dependent on household income and family size.  Family circumstances such as a birth, divorce, or relocation could affect subsidy eligibility.  Coverage without subsidies could be unaffordable for some and lead to many dropping coverage throughout the year due to changing circumstances.

Churning is likely among Medicaid recipients as well.  A consumer’s income may rise above Medicaid eligibility throughout the year, but that consumer will then become eligible for subsidized coverage on the public exchange.  Changing coverage, rather than dropping, eliminates most of the problems inherent in churning.  In states that did not expand Medicaid, like Wisconsin, if incomes rise too high a consumer may become ineligible for Medicaid and for subsidies on the public exchange as well.  These consumers will likely remain uninsured.

Additionally, changes in family status make a consumer eligible to enroll in the public exchange outside the annual open enrollment period, called a special enrollment period.  A consumer qualifies for a special enrollment period of 60 days following certain life events that involve a change in family status.  Therefore, a previously uninsured consumer could become insured anytime throughout the year due to changing life circumstances.