The Medicaid Cliff
May 5, 2020
Photo by Pete Souza/Public Domain
Economic downturns push more people onto Medicaid while states have less money to spend. What can we learn from the last recession about what might happen to Medicaid this time around?
Listen to the full episode below, read the transcript or scroll down for more information.
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By the Numbers: Medicaid
people estimated to join Medicaid due to COVID-19²
¹January 2020 Medicaid & CHIP Enrollment Data Highlights (Centers for Medicare and Medicaid Services)
²COVID-19 Impact on Medicaid, Marketplace, and the Uninsured, by State (Health Management Associates); How the COVID-19 Recession Could Affect Health Insurance Coverage (Urban Institute)
³ Federal Medical Assistance Percentage (FMAP) for Medicaid and Multiplier (Kaiser Family Foundation)
The Problem: Medicaid and Recessions
State Medicaid programs have spent the last two months focused on making sure their members can continue to access care for regular services and COVID-19, leaving little time to prepare for this coming collision.
Then and Now: Ways to Save Money on Medicaid
There are limited options available to states looking to shrink their Medicaid costs. During the Great Recession, every state took advantage of some if not all of these methods, and they are the same choices available to states today, with some practical differences.
States are required to cover some people including low-income families, pregnant women and people with disabilities, but many states cover other groups who they can stop covering if they need to save money.
Great Recession: Congress barred states from limiting eligibility if they wanted to receive additional federal support, effectively removing it as a cost-cutting mechanism. A small number states were able to limit eligibility by discontinuing coverage for groups covered under waivers.
COVID-19: Congress put the same restrictions in place this March, again removing it as an option.
Like eligibility, states are required to cover some benefits such as hospital stays, doctor visits and nursing home care. Other things, like prescription drugs, dental and vision, are optional.
COVID-19: Congress has also blocked states from cutting benefits, eliminating a popular option.
State Medicaid programs set the rates they pay to doctors, hospitals, nursing homes and addiction counselors. These rates are generally much lower than Medicare and private insurance, leading some providers to not accept Medicaid.
Great Recession: Almost every state cut provider rates a decade ago, making it by far the most popular cost-cutting tool.
States split the cost of Medicaid with the federal government, with the exact split varying from state to state. Congress can increase the federal share, leaving states with less to pay.
COVID-19: Congress passed a similar increase in March, which is expected to provide states an additional $50 billion this year and last until the national emergency declaration expires. That will likely happen before the effects of a recession are over and could lead to further cuts, including to eligibility. States are asking Congress to nearly double its initial increase and extend it until state economies have recovered.
The Evidence: Medicaid's Impact on Health and the Economy
Because there were so many things happening to people during the Great Recession — losing their health care, their homes, their jobs — it would’ve been hard for researchers to determine the impacts of the Medicaid cuts states imposed during the Great Recession.
Experts say the best evidence we have on what could happen if significant numbers of people lose access to Medicaid during this recession comes from research on the Affordable Care Act’s Medicaid expansion. Through more than 400 studies, researchers have found broad evidence that access to Medicaid improves people’s financial stability, access to care and health.
Several studies have also found positive impacts on state economies, and other research found that increased federal support of Medicaid during the Great Recession created jobs.
The Tradeoffs: Increasing Federal Investment in Medicaid
The Affordable Care Act’s Medicaid expansion has allowed researchers to quantify the health and economic benefits of Medicaid. Experts fear those gains could be at risk if federal support and eligibility protections again end too soon and states make deeper cuts.
However, state Medicaid programs are just one of many groups looking for money from a federal government that has already provided around than $3 trillion in relief. Estimates suggest additional support for Medicaid could cost hundreds of billions of dollars just this year, adding to the already growing national debt.
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Medicaid and Recessions:
COVID-19: Expected Implications for Medicaid and State Budgets (Robin Rudowitz, Kaiser Family Foundation, 4/3/2020)
Increasing Federal Medicaid Matching Rates to Provide Fiscal Relief to States During the COVID-19 Pandemic (John Holahan, Jennifer Haley, Matthew Buettgens, Caroline Elmendorf and Robin Wang; Urban Institute; April 2020)
Medicaid Protections in Families First Act Critical to Protecting Health Coverage (Judith Solomon, Jennifer Wagner and Aviva Aron-Dine; Center on Budget and Policy Priorities; 4/17/2020)
Trends in State Medicaid Programs: Looking Back and Looking Ahead (Laura Snyder and Robin Rudowitz, Kaiser Family Foundation; 2016)
Does State Fiscal Relief During Recessions Increase Employment? Evidence from the American Recovery and Reinvestment Act (Gabriel Chodorow-Reich, Laura Feiveson, Zachary Liscow and William Gui Woolston; American Economic Journal: Economic Policy; 2012; 2019 update)
Literature Review on Impacts of Medicaid:
The Effects of Medicaid Expansion under the ACA: Updated Findings from a Literature Review (Madeline Guth, Rachel Garfield, and Robin Rudowitz; Kaiser Family Foundation; 2020)
MaryAnne Lindeblad, Washington State Medicaid Director
Tom Betlach, Former Arizona Medicaid Director
Ben Sommers, MD, PhD, Professor of Health Policy and Economics, Harvard
Helen Levy, PhD, Research Professor, University of Michigan School
Music composed by Ty Citerman, with additional music from Blue Dot Sessions and Bacon
This episode was reported, produced and mixed by Ryan Levi.
Additional thanks to:
Judy Solomon, Robin Rudowitz, Lindsey Browning, Stacey Mazer, John Baackes, Tom Buchmueller, Edwin Park, Vernon Smith, Julie Ward, Atheen Venkataramani, Renu Tipireni, Victoria Perez, Emma Sandoe, Amie Lulinski, Gabriel Chodrow-Reich, Mike Visser, Michael Chernew, Matt Broaddus, John Holahan, the Tradeoffs Advisory Board…
…and our stellar staff!