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ASHINGTON — The GOP’s plan to replace the Affordable Care Act would overhaul Medicaid, the low-income insurance program that covers 70 million Americans. But within that plan, there is another little-discussed change that could have an outsized impact — and stick the poor with big medical bills.

Right now, individuals who sign up for Medicaid can get their medical care covered by the program retroactively. That coverage goes back as much as three months before they applied for the program, as long as recipients would have been eligible for the program that entire time.

Experts say that’s an important protection for people in Medicaid, who are generally living in or near poverty, because they often don’t know that they’re eligible for the program until they get sick and go to the hospital or a doctor. It also protects people in case they experience any delays in the application and enrollment process.

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“Retroactive coverage protects low-income enrollees from medical debt and its impact on their economic security,” said Tricia Brooks, who studies Medicaid at Georgetown University’s Center for Children and Families. “Many low-income adults are not aware that they are eligible for Medicaid until they have an encounter with the health system.”

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Why Republicans want to change it

The Republican bill includes a provision — three paragraphs in the 66-page bill — that would significantly shorten that period of retroactive coverage, permitting claims only from the same calendar month that the person applied.

A House GOP aide told STAT that state Medicaid directors and governors had been frustrated with the lengthier period of retroactive coverage. They argue it has driven up the program’s costs (which states pay a big percentage of) and encouraged people to wait until the last minute to enroll in Medicaid.

The aide also said that no other insurance program covers pre-enrollment medical bills for such a long period.

“We are bringing Medicaid in line with other health insurance plans and encouraging beneficiaries to sign up when they are eligible, not just when they are sick,” the aide said.

States have pleaded with the federal government for years to let them further restrict retroactive coverage. A couple states do currently have a waiver allowing them to do so, granted by the Obama administration in exchange for expanding Medicaid under the ACA.

Conservative wonks backed the states’ argument.

“State governments operate on a fixed budget,” said Joe Antos, who studies entitlement programs for the right-leaning American Enterprise Institute. “Having these kinds of potentially high-cost surprises is something they don’t want to do.”

What would the consequences be?

But policy experts, including conservatives, also acknowledged that the new policy would come with a trade-off — people who get sick or in an accident on the 30th but don’t sign up for Medicaid until the 1st could be on the hook for big medical bills.

“The concern about patients being stuck with a bill they can’t pay is sort of legitimate,” Antos said.

“This could be for some folks very challenging, especially for coverage that’s initiated in a hospitalization,” said Ben Sommers, a health economist at Harvard University who studies Medicaid. “Some significant minority of Medicaid eligibles will be directly harmed by that provision.”

Indiana, one of the states that eliminated retroactive coverage as part of its plan to expand Medicaid under the ACA, could help preview what would happen if the policy were implemented nationwide.

In a report to the Obama administration last year, the state included results from a survey of health care providers in an attempt to assess the consequences of eliminating retroactive coverage. Providers were asked about cases of charity care, in which doctors and hospitals provided care for free because patients couldn’t pay, as well as about cases of bad medical debt, in which patients accrued bills they couldn’t afford to pay off.

Results were mixed. Big chunks of providers (36 percent for charity cases; 44 percent for bad debt) said they saw no change at all. Others did report a decrease in charity cases (39 percent) and bad debt (27 percent), suggesting that for many people, expanding coverage generally while eliminating retroactive coverage specifically was still a net benefit.

But a sizable percentage of providers (16 percent, in both cases) said they saw charity cases and bad debt increase under the policy. Those findings suggest that, if retroactive coverage were largely eliminated nationwide, there would be a lot of people who end up facing big medical bills that they can’t afford.

Any health policy comes with trade-offs. In this case, it appears the price of keeping costs down for Medicaid overall would be some number of people stuck with a medical bill they can’t pay.

“To the extent that Medicaid is a safety-net program to help protect people from medical costs that they can’t afford,” said MaryBeth Musumeci, who studies the program for the Kaiser Family Foundation, “this could be a very significant change for people who incur significant medical costs before they apply.”

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