Indefinite extension of the public-health emergency and continued growth of Medicaid could be a backdoor move toward single-payer health care.
By continuing to needlessly extend the Covid-19 state of emergency, the Biden administration is making Medicaid even more financially unsustainable than it already was.
A lthough President Biden told 60 Minutes the pandemic is over, his administration has once again extended the Covid-19 state of emergency. These repeated extensions are inflating the nation’s Medicaid rolls and steepening a potential fiscal cliff for states.
A largely forgotten piece of Covid-19 legislation, the Families First Coronavirus Response Act, made major changes to the Medicaid program. First, it increased the federal share of Medicaid costs by 6.2 percentage points while the pandemic state of emergency remained in force. To receive the additional federal support, states had to keep beneficiaries on the Medicaid rolls unless they either moved out of state or asked to be dropped from the program.
These changes were expected to be temporary but will now remain in place through 2022 and beyond. On October 13, health and human services secretary Xavier Becerra issued the eleventh renewal of the nation’s Coronavirus Public Health Emergency. The emergency, which began on January 27, 2020, will now continue through January 11, 2023 unless Becerra explicitly terminates it. More likely, Becerra will extend the emergency once again in January, since Covid-19 case rates will likely rise during and after the holiday season. Case rates are already spiking in Europe, a harbinger of future U.S. trends.
Because almost no one is being dropped from Medicaid, enrollment continued to swell even after the very brief Covid-19 recession ended. According to data from the Centers for Medicare and Medicaid Services, national enrollment in Medicaid and the closely related Children’s Health Insurance Program grew from 71.3 million at the beginning of 2020 to 90 million in July 2022, the last month for which CMS has published data. Nationwide, more than one-fourth of Americans are now enrolled in Medicaid or CHIP, but enrollment rates vary widely across states. While Medicaid/CHIP enrollment rates are below 15 percent in the Dakotas, Utah, and Wyoming, over 40 percent of New Mexico and District of Columbia residents are on the programs.
Individuals often enroll in Medicaid after losing a job. Once they get a new job, the temporarily unemployed would exceed the income limit and be expected to get employer coverage or purchase coverage on a state health-care exchange. While the emergency remains in place, anyone who lost a job since early 2020 and was subsequently rehired can stay in the program.
Another source of natural attrition from Medicaid is beneficiaries’ ageing out of eligibility. When a Medicaid beneficiary reaches 65, he or she is normally expected to sign up for Medicare and stop using Medicaid coverage. However, this may not be advantageous to the newly senior citizen.
Medicare has premiums, deductibles, and co-payments, whereas Medicaid typically does not require beneficiaries to make any payments. So, while the emergency continues, some beneficiaries may continue to receive health services through Medicaid even after turning 65.
Thus far, additional Medicaid expenditures arising from higher enrollment have not been a fiscal challenge for states because they are offset by the additional 6.2 percentage points of Federal Medical Assistance Percentage available during the emergency. That could change if the administration allows the emergency to expire. New Mexico, for example, would have to spend an additional $300 million of its $8.5 billion general-fund budget on Medicaid-provider reimbursements. In California, the general-fund impact would exceed $4 billion.
States can limit the cost spike by aggressively pruning their Medicaid rolls. But, after years of not checking eligibility, some states may have lost the ability or even the will to ensure that beneficiaries continue to meet qualification criteria.
Rather than purge their rolls or take a budgetary hit, officials in some states might lobby for indefinite extensions to the public-health emergency, or, at least, the policy changes it has driven.
And they may not be alone since hospitals have also benefited from some of the emergency provisions. During the emergency, CMS has waived numerous regulations it normally applies to health-care providers. If the emergency ends, these regulations will snap back into place, reducing provider flexibility and increasing their costs.
Indefinite extension of the public-health emergency and continued growth of Medicaid could even be seen as a backdoor move toward single-payer health care. As more Americans temporarily meet the program’s eligibility guidelines and then stay on the program for the long term, fewer will require private health coverage. While some may welcome this stealthy path toward single-payer, those who desire a robust private health-insurance market must be on guard against it.