Congress should protect Medicaid to protect health

The economic downturn in the wake of the COVID-19 pandemic has driven the unemployment rate to record levels, causing millions more people to qualify for Medicaid coverage. The crisis also has resulted in significant shortfalls in state budgets that could force state officials to make harmful cuts to Medicaid and other vital public services if Congress does not act.

How is Medicaid funded?

Medicaid is a joint state and federal program that provides insurance to approximately 74 million Americans, making it the nation’s largest health insurance program. And while some benefits are covered by all Medicaid programs, states can decide whether to extend certain optional benefits to recipients. Medicaid provides health insurance to many individuals who would otherwise be unable to afford health services – this includes families and children with low incomes, individuals who have certain serious physical and mental health conditions and elderly people in nursing homes. Blue Cross and Blue Shield companies cover 7.1 million people in 24 states and Puerto Rico through Medicaid and the Children’s Health Insurance Program (CHIP).  

Early on in the COVID-19 crisis, Congress enacted the bipartisan Families First Coronavirus Response Act, which modestly increased the share of Medicaid costs paid by the federal government. This was an important first step, but more action is needed.

What happens if Congress does not act?

States face $765 billion in projected budget shortfalls over the next three years as revenues from state income and sales taxes have dramatically fallen due to shuttered businesses and lost jobs. Without additional financial relief from Washington, states will have to make huge cuts in important services, including Medicaid.

Why is additional action from Congress needed?

As part of the Families First Coronavirus Response Act, lawmakers provided a temporary 6.2 percentage point increase to the Federal Medical Assistance Percentage (FMAP), the share of Medicaid costs that the federal government pays in each state. While this initial increase in the FMAP helped states address some of the gap in their Medicaid budgets, it is tied to the duration of the coronavirus public health emergency (currently set to expire on July 25), and it does not apply to millions of people who obtained Medicaid coverage through a provision of the Affordable Care Act.

BCBSA is urging Congress to raise the federal contribution to at least 12 percentage points, and provide an even larger increase for states that have been hit the hardest by the economic downturn. We believe Congress should maintain this increase until there is a full economic recovery in each state.

Read more about how Medicaid provides access to critical health services for millions of adults and children here.

Additional Resources:

• Read a joint letter signed by BCBSA urging Congressional leaders to increase state Medicaid FMAP rates by at least 12 percent.
• Learn more about the Coronavirus Medicaid Response Act (S. 4108), supported by BCBSA, which will automatically increase Medicaid FMAP rates during periods of economic downturn.
• Read the joint letter, led by the National Governors Association and signed by BCBSA and more than 100 national organizations, urging Congressional leaders to increase Medicaid FMAP rates by 12 percent and rescind the Medicaid Fiscal Accountability Rule.