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1 1 (November 12, 2020)

handle is hein.crs/govdcoo0001 and id is 1 raw text is: \ Q .................................................................................................................................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............ . . . . . . . . . . . Impact of the Recession on Medicaid November 12, 2020 Medicaid is a means -tested entitlement programthat finances the deliveryofprimary and acute medicalservices as well as long-termservices and supports. Medicaid is a federal and state partnership that is jointly financed by both the federal government and the states. The federalgovernment's share formost Medicaid expenditures is called the federal medical assistance percentage (FMAP). Generally determined annually, the FMAPformulais designed so that the federal government pays a largerportion ofMedicaid costs in states with lower per capita incomes relative to the national average (and vice versa for states with higherpercapita incomes). Federal Medicaid funding to states is open-ended. Medicaid expenditures are influenced by economic, demographic, and programmatic factors. Economic factors include health care prices, unemployment rates, and individuals' wages. In addition, state-specific factors, such as programmatic decisions and demographics, affect Medicaid expenditures and cause Medicaid spendingto vary widely from state to state. Medicaid is a countercyclicalprogram, and during periods of economic downturn, state Medicaid programs face dual pressures. First, programenrollment usually increases when job and income losses cause more people to become eligible for Medicaid. Second, states generally have more difficulty financing thestateshareofMedicaid expenditures because state revenue growth tends to weaken during economic downturns. The Medicaid programcan create a problemfor state budgets during economic downturns because Medicaid is one of the largest items in state budgets. When viewed nationally, Medicaid is the largest or second-largest itemin state budgets, depending on how it is measured. In terms of total state spending (i.e., funds fromall state and federal sources), according to the National Association of State Budget Officers' (NA SBO's) StateExpenditure Report, Medicaid was the largest budget item, at an estimated 28.9% of total state spending in state fiscal year (SFY) 2019. However, Medicaid was the second-largest component in terms of state generalfund spending (i.e., the portion that states must financeon their own through taxes and other means). In SFY2019, Medicaid expenditures were an estimated 19.7% of state generalfund spending, whereas elementary and secondary education spending was 35.6%. c rrn Recasson The National Bureau of Economic Research shows the United States entered the current recession in February 2020 following the start of the Coronavirus Disease 2019 (COVID-19) pandemic. Fromthe onset of the recession through July 2020, data from the Centers for Medicare & Medicaid Services show Medicaid enrollment increased 6.7% nationally. Prior to the recession, Medicaid enrollment decreased 1.7% in 2019. The growth in Medicaid enrollment varies bystatefrom2.5% to 14.9%, and one state (Montana) had an enrollment decrease of 0.7% from February through June 2020. Figure 1 shows monthly Medicaid enrollment nationally fromJune 2017 through July 2020. Figure I. Monthly Medicaid Enrollment June 2017-July 2020 80 Millions uS G SA s4b so 40 Start of Recesson - 20 C Source: Centers for Medicare & Medicaid Services, Medicaid and CHIP Eligibility and Enrollment Performance Indicators, as of October 30,2020. An analysis in Health Affairs, a health policy publication, of state-levelMedicaidenrollment data fromMarch 1, 2020, through June 1, 2020, did not find a correlation between state-level Medicaid enrollment growth and job los s es in the 26 states studied. However, the recession's effects on Medicaid enrollment could lag job los ses, for example, as individuals move off COBRA continuation coverage orresume utilizing health care services. State tax collections tend to lag in a reces sion, yet s tates already have experiencedreductions in general fund revenues. According to NASBO, for SFY2020, which ended on June 30, 2020 for mo s t s tates, s tates experienced a 6% shortfall in revenues compared with their revenue estimates prepared before the recession. States experienced strong revenue growth for the first three quarters of SFY2020, but that growth was offset in the fourth quarter, when staterevenues were negativelyimpacted by the recession. States expectrevenue declines in SFY2021. According to a Kaiser Family Foundation (KFF) survey of state Medicaid directors, the 43 responding states expect

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