The Impact of COVID-19 on the Health Care Safety Net

| Brittany McCullough
the word Medicaid inside a ripped image of a dollar

While some states have started to lift stay-at-home orders and are taking the first steps toward getting back to some sense of normalcy, the health care safety net is one thing to keep an eye on.

There have been a number of stories about the disproportionate impact of COVID-19 on low-income and minority communities, of which many are Medicaid enrollees. Medicaid has long been considered the heart of the nation’s health care safety net covering nearly 64 million people as of January 2020. And, with the increasing number of individuals becoming unemployed, Medicaid enrollment is likely to increase.

So, what do early insights show?

A recent Families USA analysis shows that states began to see a marked increase in Medicaid enrollment starting in April. In fact, in the January to May timeframe, some states have seen a ten percent increase in enrollment. This is important to note due to how Medicaid is financed. Medicaid is a joint federal-state partnership with the federal government matching states’ spending based on a pre-determined formula in which poorer states get more financial support. Under the Federal Medical Assistance Percentage (FMAP), the federal government takes on at minimum, 50 percent of Medicaid costs. For curious minds, current FMAP percentages can be found by clicking here.

So, why does the federal share matter?

Well, states operate on a predetermined budget that they must balance every year. While Medicaid enrollment is generally predictable, no one could have predicted the economic downturn that COVID-19 would cause.  As such, to help alleviate the pressure states are facing, Congress approved a 6.2 percentage point increase in FMAP that is retroactive to the start of the year. And, while the increased matching is welcome, there are still concerns that Medicaid providers have not gotten enough direct funding. States will be able to seek the increased federal matching funds when enrollees utilize services but what about providers that exclusively serve Medicaid enrollees? Where is the help for them?

Quite frankly, I want to believe that it’s coming. However, I know all too well that majority of funds will continue to be directed towards hospitals, physicians and Medicare providers. The National Association of Medicaid Directors knows that too and in a recent letter to CMS and OMB, they called for retainer payments to be made to essential Medicaid providers under section 1115 waiver authority. House Democrats appear to have heard the cries of Medicaid providers and included more funding in the recently passed Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act). But, before you get excited, the bill is pretty much dead on arrival at the Senate.

Nonetheless, I hope Congress can come together soon to address the real concerns that Medicaid providers are facing and ensure that our nation’s most vulnerable still have access to quality care. Medicaid is the backbone of our delivery system and if action isn’t taken soon, the impact on the health care safety net could be catastrophic.

Brittany McCullough photo

Brittany McCullough, Manager, Health Policy and Government Programs.

Brittany McCullough, URAC's Manager of Health Policy and Government Programs, tracks and analyzes legislation and regulations of importance to URAC stakeholders. She also helps manage URAC’s public policy external affairs portfolio and oversees compliance with government deemed programs. Most of her policy and research work has been related to the ACA, Medicaid managed care, Part D, telehealth and mental health parity. She holds a B.S. in Neuroscience and a Master of Health Administration.

Views, thoughts and opinions expressed in my articles belong solely to me, and not necessarily to my employer.

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