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How the Ongoing Public Health Emergency Continues Unchecked Medicaid Growth

On July 15, the Biden administration renewed the COVID-19 Public Health Emergency declaration for another three months. By the time of its next renewal on October 13, the emergency will have spanned nearly three years since its creation in January 2020, including two presidents, three Health and Human Services secretaries and a series of COVID variants. 

The Biden administration has also stated in the past that it will provide states a 60-day notice before ending the emergency. Combined with the recent increase in COVID cases and the political implications of the upcoming election, it’s fair to predict the emergency will remain in place through the new year. 

However, one provision that deserves increased scrutiny is the continued increase in the federal share of Medicaid spending tied to the emergency declaration. The Families First Coronavirus Response Act, passed by Congress in March 2020, provided states with a 6.2-percentage-point increase in the federal medical assistance percentage, more commonly referred to as FMAP, as long as the emergency remains in place. 

And crucially, the 6.2-point increase remains only if states don’t conduct what are known as maintenance of eligibility requirements. This in effect renders states unable to assess whether current Medicaid beneficiaries are still eligible to be on the program. 

That means the program will continue to grow without the prospect of any reduction in enrollment. 

According to the most recent annual report (FY21) provided by the Department of Community Health, total Medicaid spending in Georgia was over $11.2 billion. By most estimates, Georgia has received more than $3 billion alone from the increased FMAP rate since the start of the pandemic. 

As the number of Medicaid beneficiaries continues to grow, the FMAP distribution increases. What was estimated as $1.24 billion in FMAP funding in 2020, grew to $1.33 billion in 2021. 2022 projections are over $1.4 billion as long as the emergency remains in effect. 

These perverse spending incentives produced by Medicaid are not new. In Georgia alone, the federal government spends two dollars on Medicaid for every one spent by the state. 

In fact, Medicaid financing is so misaligned, the scholar Michael Greve often highlights the program as the worst example of what he refers to as “cartel federalism.”  Namely, when the federal government distributes funding based on revenues, states are incentivized to spend more. 

Serious Medicaid reform was limited long before the pandemic by statutory restrictions and administrative burden. Now the federal government continues to offer states additional money without an off-ramp in sight.