States are about to be hit by a Medicaid tidal wave

|

As the COVID-19 pandemic continues to unfold, states should be bracing for massive upticks in Medicaid dependency. This uptick will occur not only as a result of the economic downturn, but also as a result of Medicaid policy changes that have tied states’ hands and further limited their ability to properly manage this important program.

Medicaid dependency and spending has been surging for years. Total spending on the program has more than tripled since 2000, surpassing an estimated $613 billion in 2019. By 2019, nearly 75 million individuals were dependent on Medicaid, a record high. For every three dollars states spend, one must now go to Medicaid.

These cost and enrollment explosions have grown even worse since ObamaCare further opened up the program to a new class of able-bodied, childless adults. Since that time, more than 12 million of these adults have been added to the program, in addition to increases in other Medicaid categories.

Now, as the national economy continues to absorb the impact of the COVID-19 outbreak and subsequent state shutdowns, Medicaid dependency—and spending—is projected to soar even higher, all at a time when state budgets are already under immense pressure. In fact, state general fund revenues are expected to drop by as much as 20 percent in the coming months, creating the perfect storm of declining revenues and increasing Medicaid costs.