The Medicaid burden on state budgets will pose a challenge for President-elect Joe Biden, who wants to expand Medicaid and reduce the number of uninsured people. (Photo: Shutterstock)
The coronavirus pandemic is having a domino effect on state budgets. Tax revenues have fallen and many unemployed Americans are enrolling in Medicaid, forcing state leaders to consider cutting benefits and reimbursements, the Wall Street Journal reported.
Congress boosted federal matching funds to states for Medicaid as part of its first coronavirus relief package, but many states still are struggling to afford the increasing pace of sign-ups in the program for low-income and disabled people. Enrollment for the fiscal year ending Sept. 30, 2021, is expected to jump 8.2%, with state spending accelerating by 8.4%, based on data from 42 state Medicaid directors compiled by the Kaiser Family Foundation.
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Medicaid has grown to become one of the largest portions of state budgets, from about 21% in fiscal 2008 to about 30% in fiscal 2018, according to the National Association of State Budget Officers. State leaders working on budgets that must be finalized in July are confronting budget crises. Tax revenues have tumbled since March because of restrictions on businesses, social distancing and high unemployment related to the pandemic, economists have found.
Most states have constitutional or statutory requirements that they maintain balanced budgets. Some state leaders may try to narrow the gap between the revenues they need to balance the budget and the shortfalls they face by cutting vision and dental benefits, or payments to doctors and other providers. Cuts to other programs, such as education, also could be in the mix.
"We are starting to hear as states put budgets together that they're looking at cuts," said Joan Alker, executive director of the Center for Children and Families at Georgetown University. Cuts to health-care providers typically are at the top of the list, she said.
The Medicaid burden on state budgets will pose a challenge for President-elect Joe Biden, who wants to expand Medicaid and reduce the number of uninsured people. Amid the coronavirus pandemic, a politically divided Congress faces pressure to further increase federal matching funds to states, a proposal that Biden has also said he would support.
States are limited when it comes to cutting Medicaid enrollment as a way to curb spending. Federal legislation bars states from making such changes while receiving the current boost in federal matching funds. The Trump administration in late October granted states some flexibility to change coverage or enrollment while receiving the funding. Changes to provider payments could sting, because doctors and hospitals already may get reimbursements from Medicaid that are less than the cost of the services provided or commercial rates.
"There is no good answer," said Matt Salo, executive director of the National Association of Medicaid Directors, a nonprofit that represents state Medicaid leaders. "This is the reason there needs to be congressional action. This is why we have a federal government. To support states in a time of crisis. We're not going to be able to get out of this on our own."
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
