Center on Budget and Policy Priorities: Medicaid Funding Boost for States Can't Wait
The House COVID-19 bill's temporary Medicaid funding boost, if in effect for all of calendar year 2020, would deliver roughly
* Help states address immediate public health needs. Responding to the virus is straining states financially as they move to make testing available, deliver care to infected individuals (particularly those requiring inpatient services), create and support quarantine environments, increase sanitation efforts in public spaces, and ramp up public communications efforts, among other actions. At the same time, state revenues will likely take a hit as the economy slows. A temporary FMAP increase would free up funding that states would otherwise need for Medicaid, enabling them to rapidly invest in critical measures to protect the public's health during the emergency.
* Enable states to use Medicaid to cover COVID-19-related needs. Medicaid gives states wide flexibility to help address the crisis -- from expanding eligibility to cover uninsured people who need testing and care, to broadening coverage of telehealth (i.e., using digital information and communication technologies to deliver health services remotely), to covering certain quarantine-related costs, as
* Prevent Medicaid cuts during the public health crisis. Without federal action, state policymakers -- bound by state balanced budget requirements -- face pressure to cut Medicaid costs during economic downturns, history shows. Medicaid enrollment naturally rises during any downturn even as state revenues fall, and a downturn coupled with a public health emergency places extra burdens on Medicaid to provide additional treatment as well. State cuts in eligibility, benefits, and provider payments like those in past recessions would undermine the public health response and create immense hardship for families.
* Support the economy. With the pandemic likely to trigger an economic downturn, states will require federal fiscal relief to weather the storm. Rising unemployment and falling economic activity shrink state tax revenues even as demand for things like Medicaid and unemployment insurance rises. An FMAP increase is a proven way to deliver swift economic relief that saves or creates jobs and stimulates economic activity.
After raising the FMAP and adopting other policies in the House bill, policymakers should quickly enact additional needed steps to address the public health emergency, the significant threat of a rapid deterioration in the economy, and the fiscal relief states will need as a result of a potentially steep downturn. That could include providing additional or longer-lasting FMAP increases linked to the state of the economy.
One important step would be to increase the federal share of costs for the Affordable Care Act's Medicaid expansion to low-income adults. (
See table here (https://www.cbpp.org/blog/medicaid-funding-boost-for-states-cant-wait).
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