The high number of Americans facing tough financial situations — which will likely create a surge of people enrolling in Medicaid due to rising unemployment — is leading some experts and advocates to say funding that Congress gave the states last week may not be enough.
On Thursday, the Department of Labor reported that an eye-popping 6.6 million people filed initial unemployment claims in the week ending March 28. That followed 3.3 million claims the previous week, which was already a record.
“This is going to be a very important safety net for a lot of people losing their jobs. Medicaid eligibility is determined by monthly income, which means that even if you had some significant income for the first few months of the year, if your income goes way down, you are very likely going to be eligible for Medicaid,” said Linda Blumberg, an institute fellow in the Health Policy Center at the left-leaning Urban Institute.
During times of financial difficulty, enrollment typically spikes in Medicaid, the nation’s health insurance program primarily serving the poor.
“Medicaid is sort of countercyclical in the sense that as more people need Medicaid, the harder it is for a state to afford it,” said Tom Barker, a partner at Foley Hoag and former Health and Human Services acting general counsel. “There's always been this debate over whether or not the FMAP [Federal Medical Assistance Percentage] rate should automatically change if the economy goes into a recession and more people need Medicaid."
The Federal Medical Assistance Percentage refers to a state's matching rate from the federal government.
States are eligible for a 6.2 percent FMAP increase during the public health emergency thanks to the second COVID-19 response law. To receive this additional federal funding, states must not make eligibility more restrictive or increase premiums, must provide continuous enrollment, and not charge cost-sharing for treatment or testing for COVID-19.
“If the unemployment rate is really going to be as high as it may be, the FMAP increase probably won't be enough, and I think that's a concern that a lot of states have,” said Barker.
The Trump administration is starting to consider addressing states' cost concerns in a limited, piecemeal way. A Trump administration official confirmed that federal health officials are seeking to use part of a separate $100 billion in funding for medical providers in the third COVID-19 law to pay for Medicaid waivers for states to expand treatment coverage for COVID-19 patients.
Comparisons to the last recession
During the last major recession from 2007 to 2009, the uninsured rate rose. But that was before the enactment of the 2010 health care law.
The health care law enabled states to expand Medicaid coverage to 138 percent of the federal poverty level and allowed individuals to buy insurance for themselves and their families — often at a federally subsidized rate — through government marketplace websites.
“We saw big increases in the uninsured,” said Robin Rudowitz, co-director for the Program on Medicaid and the Uninsured at the nonpartisan Kaiser Family Foundation. “While there’s likely to be increases in the uninsured, there are more options available for states and for individuals in terms of coverage options.”
During that recession, Congress enacted a stimulus package that helped states.
“A big component of that was that was a temporary increase in the [Medicaid] match rate, which was a way to help support states fiscally but also bolster the Medicaid programs. So there's precedent and experience in terms of using a temporary increase in match rate as a vehicle to again support both coverage and access to health services as well as getting money to states,” said Rudowitz.
The boost for states in the 2009 stimulus law varied by state. All states got at least a 6.2 percent increase to recent matching rates, with additional funding based on a state's increase in unemployment. The FMAP increases ranged from 6.2 to 13.9 percentage points in early fiscal 2009, according to the HHS Office of Inspector General.
Differences among states
The health coverage available to individuals during the COVID-19 health emergency will vary.
“It’s going to vary quite a bit by state both because of the effects of the virus pandemic spreading differently across states, but in particular, most especially it's going to vary based on whether or not the state has expanded Medicaid eligibility,” said Blumberg.
Individuals in states that did not expand Medicaid are more likely to fall in a coverage gap between qualifying for traditional Medicaid and earning enough to qualify for a subsidy for marketplace insurance.
Parents in non-expansion states only qualify for Medicaid if they are very poor, with a median income of 40 percent of the federal poverty level, according to the Kaiser Family Foundation. Childless adults often do not qualify for Medicaid in most of these non-expansion states. But subsidized marketplace coverage is only for people whose income at least reaches 100 percent of the poverty level.
“In non-expansion states, I think it's going to be tougher because certainly childless adults can be affected by COVID-19, and they don't have Medicaid coverage in non-expansion states, whereas in an expansion state they do,” said Barker. “I think that's part of the reason that in the second supplemental, Congress created a Medicaid benefit, at least for COVID-19 testing, for the uninsured. But it doesn't cover treatment, and so I think that is going to be an issue in non-expansion states.”
Experts expect there also to be some increase in the number of individuals applying for marketplace coverage but it will likely be less substantial than the Medicaid increase.
Blumberg warned that individuals in most states need to remember that they only have 60 days after losing a job to apply for marketplace insurance coverage during a special enrollment period. Some states have created special enrollment periods for the individual market during the health emergency, but most have not.
Under Medicaid law, there’s no open enrollment period and most states have retroactive coverage, meaning a provider at a hospital could help an admitted patient sign up for coverage and the benefits apply to the 90 days before enrollment.
“Because of that retroactive coverage, individuals and providers have access to Medicaid 90 days back from the point of application,” said Rudowitz, who added the policy was waived in states including Arizona, Iowa and Indiana. States must apply for a federal waiver to eliminate retroactive coverage.
Throughout the country, states will be grappling with how to pay their share for the anticipated swell in Medicaid cases.
"We're talking about an acute economic crisis that is affecting way more people than the actual virus is directly impacting," said Blumberg. "This is going to be a problem for any state as economic activity decreases substantially and where people are losing their employer-based health insurance, and there's nothing to catch them when they fall."