Since the COVID-19 crisis began, millions of Americans have lost their jobs and turned to Medicaid to keep their families healthy. It’s been a critical safety net in turbulent times. But to ensure the program can continue to deliver care, particularly to the most vulnerable populations, Congress must help states facing enormous budget deficits as a result of this crisis.
States ramped up Medicaid when the pandemic hit the country hard, and it’s met the moment. Powered by Medicaid managed-care organizations, which cover two-thirds of enrollees through a public-private partnership between federal and state governments and health insurers, Medicaid enrollees are covered for all of the costs of COVID-19-related treatments and diagnostic testing. Medicaid managed-care organizations are also waiving prior authorization—speeding care to those who need it when they need it most.
Medicaid managed-care programs have also saved billions in taxpayer dollars by streamlining services and working directly with doctors and hospitals–a critical benefit at a time when states are dealing with historic budget shortfalls. These plans have provided additional funding and support to safety-net hospitals and have given critical financial assistance to clinics and not-for-profit organizations that are supporting COVID-19 relief efforts.
But even with these investments and partnerships, the pandemic has pushed state budgets to the brink. While states’ tax revenue has fallen, Medicaid enrollment has surged due to the pandemic. Colorado, for example, is expecting to enroll 500,000 individuals in Medicaid by the end of 2020, roughly a 40% increase from March 2020 enrollment. And in Arizona, Medicaid enrollment has grown by almost 140,000 since March 2020, reaching a record high of 2 million as of June.
Based on current forecasts, states will likely face revenue shortfalls of approximately $650 billion in the next three years. With most states facing statutory or constitutional requirements to balance their budgets, that means state leaders will be forced to enact deep Medicaid cuts that could cause millions of Americans to lose access to critical healthcare services.
Some proposals have called for funds to be taken away from Medicaid managed-care plans and given to the states to solve budgetary concerns. But this isn’t a workable solution, especially when Americans are relying on these plans more than ever. These health plans already operate on razor-thin margins, and the vast majority of tax dollars invested in the programs go toward care and services for the people who rely on Medicaid.
Taking money from Medicaid managed care is an especially bad idea given that these plans must be able to pay for care that will be delivered in the second half of 2020 and into 2021. And these health plans won’t just be paying for COVID-19 treatment—they must also be prepared to address a looming backlog of costly procedures that many have put off during the COVID era.
There are better solutions to these budgetary challenges facing states. Congress has already allocated $175 billion in grants to doctors and hospitals through the CARES Act to help them remain operational during the crisis. What’s needed now is an increase in the federal medical assistance percentage, or FMAP, the federal share of Medicaid funding. America’s Health Insurance Plans agrees with state governors and organizations representing territories, counties, cities and towns that Congress needs to increase FMAP by at least 12% until states’ economic recovery is secure and stable.
A strong and effective Medicaid program is critical not only to maintaining health for our most vulnerable populations, but also to ensuring our nation’s economic recovery. Medicaid managed-care plans will continue to work with their state partners, safety-net providers and all stakeholders to ensure available services and access to care during these difficult times.
