Locked-In: How Congress’s Handcuffs Have Caused Medicaid to Spiral Out of Control

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In March of 2020, Congress responded to the COVID-19 pandemic through a series of pieces of federal legislation, including the Families First Coronavirus Response Act (FFCRA). This legislation gave states an additional 6.2 percent in Medicaid funding for traditional Medicaid populations.

However, in exchange for this temporary 6.2 percent bump in states’ federal medical assistance percentage (FMAP), states had to sacrifice control over their Medicaid programs. Specifically, states who accepted the additional funding agreed not to strengthen eligibility standards and methodologies, increase premiums, or even remove individuals from their Medicaid rolls—even if they have become ineligible. The only way in which individuals can be removed from the program is if they voluntarily disenroll or leave the state.

Imagine a criminal robbing a bank, and the police being told that they cannot exercise their law enforcement duties. Imagine a senior being targeted in an online scam, and state prosecutors being told they cannot do anything to stop it. This is precisely the situation states find themselves in as it relates to their Medicaid programs—so long as they continue to accept the federal bump. Instead of “handcuffing” ineligible enrollees committing Medicaid fraud, states have been handcuffed themselves by Congress. And now, as long as states continue to accept the enhanced FMAP increase, they are willingly keeping those handcuffs on when they do not have to.

To make matters worse, Congress disregarded the $600 weekly unemployment bonus during the early stages of the COVID-19 pandemic from counting towards Medicaid eligibility. This was effectively a massive expansion of Medicaid, allowing unemployment enrollees who received, on average, more than $50,000 on an annualized basis to qualify for Medicaid.

And since the FFCRA restrictions remain in effect, those individuals are still unable to be removed from the Medicaid programs—even if they no longer qualify for Medicaid.

As a result, states have been faced with the harsh reality of relinquishing control of their Medicaid programs to the federal government. This has created an impossible situation for states with commonsense program integrity laws on the books, which are now in conflict with federal law.

Due to these handcuffs and the unemployment bonus, Medicaid enrollment has spiked to unprecedented levels. In order to comply with the FFCRA, millions of ineligible or potentially ineligible enrollees have had their coverage “protected” or their standard Medicaid redeterminations and renewals delayed, creating a Medicaid crisis.