COVID-19 has devastated communities across Pennsylvania, either through illness or loss of livelihood.
These economic conditions created by the pandemic have brought on a tremendous budget shortfall in the commonwealth; in May, revenues were nearly $440 million below estimates, pushing Pennsylvania’s current revenue shortfall to $2.6 billion. These shortfalls have the potential to further harm families and communities if the federal government does not take action to shore up the programs that keep Pennsylvanians healthy.
Medicaid and the Children’s Health Insurance Program (CHIP) have formed the backbone of our public health response to the pandemic. According to the Robert Wood Johnson Foundation, using mid-range estimates, more than 1.64 million Pennsylvanians are expected to lose employer-sponsored health insurance because of COVID-19. The same study estimated that 864,000 people will become eligible for Medicaid as a result.
At a time when our state faces unprecedented deficits and may continue to see losses for years, it is critical that federal lawmakers work to strengthen Medicaid, as they have done in previous crises. Congress could do this through a few key measures, explained below.
Medicaid is a federal and state partnership, meaning that both state and federal governments provide funds for it. With state budgets in trouble, Congress should act quickly to increase federal matching funds to prevent states from being forced to consider such harmful changes as reducing benefits or eligibility.
Through the Families First Act, Congress has already enacted a 6.2% increase in the Federal Medical Assistance Percentage (FMAP), a calculation that determines federal matching dollars for Medicaid, but this is simply inadequate. In fact, during the Great Recession of 2008, Pennsylvania’s FMAP calculation was increased by almost double this number. The Center on Budget & Policy Priorities estimates that the disparity between this increase and previous increases means Pennsylvania will lose out on more than $1.7 billion in federal funds. Congress must increase federal funding to match that of previous recessions.
Next, Congress must take action to ensure that states do not make harmful changes to Medicaid benefits or create eligibility barriers during the pandemic. At a time when people are at high risk of losing their employment or getting sick, a reduction in benefits or eligibility could be catastrophic. Harmful changes could include such things as a more difficult application process, a reduction in home- and community-based services for seniors or people with disabilities, and reduced payments to physicians and hospitals.
In the past, Congress has mandated that states keep their current benefits, eligibility criteria, and application process in place throughout the duration of any additional federal support for Medicaid, but as of now, Congress has not put those provisions in place for the COVID-19 pandemic.
Third, Congress should ensure that federal funds are in place for an adequate time period, not just through the end of emergency declarations. Pennsylvania’s economy cannot rebound on a moment’s notice, and nor can our budget. In previous crises, the federal government has ensured that its aid continued until such a time that state governments could resume their full participation in the Medicaid partnership. This should be the case for COVID-19.
Fourth, Congress should postpone reductions to matching funds for CHIP that were scheduled to take place over the next two years. This reduction in federal matching funds should be postponed until the end of the public health emergency and related economic downtown. Without the full federal match, the state may have to consider harmful policies such as a waiting period for families before they can enroll in CHIP.
And, last, more unrestricted funding should be provided to states and municipalities to support our public-health infrastructure during this time of unprecedented need.
Unlike the federal government, most states, including Pennsylvania, are required to balance their budgets. Without the federal assistance outlined above, they will be forced to make tough choices that are certain to have negative health and financial outcomes for their residents, such as cutting Medicaid, CHIP, or other programs that broadly contribute to Pennsylvanians’ health such as education or safety net programs.
Making cuts to public health, education, and safety net programs at a time when they are most critically needed would be a mistake, and the federal government should do everything in its power to avoid that. Pennsylvanians can’t afford cuts during the COVID-19 pandemic.