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Congressional Leadership Must Protect Medicaid in the COVID-19 Crisis

April 16, 2020

More Pennsylvanians will rely on Medicaid for their health insurance coverage as Pennsylvania responds to the crisis created by the novel coronavirus, COVID 19. New projections show that Pennsylvania will add between 459,000 and 1,041,000 to Medicaid rolls as people endure both the loss of income and loss of employer-sponsored coverage. The mid-range estimate is an additional 737,000 Pennsylvanians on Medicaid. Medicaid is a critical part of our response to the current crisis, and lawmakers in Washington need to ensure that the state is able to maintain current benefits and fully fund the program.

Congress has a critical role to play in supporting Medicaid during this pandemic. In previous national crises, the federal government has substantially increased the share it pays for Medicaid expenses, known as the Federal Matching Assistance Percentage, or “FMAP.” This has helped states as they cope with significantly increased enrollment, which increases state spending on Medicaid. In “normal” times, the federal government pays about 52.2 percent of Medicaid expenses. The newly passed federal Families First Coronavirus Response Act increased this by 6.2 percent to 58.4 percent. Estimates show that this could add $1.55 billion in new federal funds if the crisis lasts the entire year. While this increase helps, it’s not nearly enough.

In previous recessions, the federal government increased the FMAP in a manner similar to the Families First Act, and then subsequently increased the FMAP even more for states with high unemployment. Ultimately, states’ FMAP rose by an average of almost 10 percent. This would translate into nearly another billion dollars of federal assistance for the state. With Pennsylvania currently at 1.4 million jobless claims, Pennsylvania desperately needs this help. Subsequent federal pandemic response measures must provide a similar offset to avoid crushing our state budget. Additionally, the current increase in federal funding is slated to end when the official public health emergency ends. However, the Congressional Budget Office forecasts elevated unemployment levels through 2021 and beyond. Congress must increase the FMAP more than the current adjustment, and ensure it continues throughout the period where unemployment, and therefore Medicaid enrollment, will be high.

It is critical that we protect Medicaid enrollees during this crisis. State lawmakers, faced with increased Medicaid costs, may look for other ways to reduce Medicaid spending, such as making it harder to apply for Medicaid, creating new barriers or eligibility requirements, or cutting benefits. In previous recessions, states have imposed premiums, required people to complete additional paperwork and submit more verification, and decreased staff available to help people sign up for or renew coverage. Some states have taken even more extreme measures and eliminated all dental care or scaled back Home and Community Based Services for older adults and people with disabilities. All of these courses of action would harm the health of those who desperately need Medicaid in a crisis.

States are already considering harmful changes to Medicaid during this public health crisis. Virginia is shrinking its eligibility workforce, Oklahoma has cut payment rates for medical equipment, and Alaska and Nevada are considering large, unspecified cuts. The federal government can end all of this and protect eligibility and benefits for all who need Medicaid by imposing “maintenance of effort requirements” that prohibit states from changing benefits or eligibility while they are receiving additional federal funds.

In Pennsylvania, enrollment in Medicaid is expected to surge as unemployment in the commonwealth reaches a historic high.  Pennsylvania cannot shoulder this cost alone. In its next COVID relief package, Congress should:

  • Add to the modest FMAP increase that was enacted in the Families First Act;
  • Continue any increases until the economy truly recovers; and
  • Maintain strong protections (“maintenance of effort requirements”) to keep states from cutting coverage while receiving the additional funds.