States Hold the Key to Unlocking Federal Medicaid Handcuffs

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At the height of the COVID-19 pandemic, Congress offered states more federal dollars to help pay for their growing Medicaid rolls. Distracted by the crisis in front of them, many state leaders hardly even noticed the handcuffs that were slipped on as the extra cash changed hands.

But more federal funding inevitably means more federal control—and now states are realizing they have been locked into a Medicaid straitjacket, with only one option to break free and restore program integrity: opt out.

Under the Families First Coronavirus Response Act, Congress gave states an additional 6.2 percent of federal funding for states’ traditional Medicaid populations. The tradeoff?  States had to agree not to raise premiums, strengthen eligibility standards, or even remove disqualified individuals from the Medicaid program.