• Commentary

Taxpayer-funded benefits should be for those that are supposed to receive them

Language matters. Here are some headlines from this past week about a hot topic:

“Looming end of pandemic funds to oust waves of Georgians from Medicaid”

“More than 500,000 Georgians could begin to lose health coverage by spring if pandemic-era Medicaid relief ends”

To judge by these headlines, one might be forgiven for thinking the issue is funding: There is money to cover these Georgians now, but soon it will run out. And – taking it a step further – one might wonder why our elected officials wouldn’t find the money to continue taking care of these people. Isn’t the state running a surplus?

But this issue isn’t mostly about having enough money. Let me propose an alternate headline:

“People to lose taxpayer-funded benefit they’re ineligible for, after years of receiving it anyway”

That puts quite a different gloss on matters, huh?

At issue is one provision in a COVID-19 relief bill passed in March 2020. At the time, Congress was dedicating trillions of dollars to staving off an economic and public-health catastrophe.

One specific concern was that state governments, with revenues falling, would cut Medicaid spending and leave vulnerable Americans without health coverage during a global pandemic. At the same time, sharp increases in unemployment meant millions of Americans were likely to lose their employer-provided health plans, perhaps for a very long time – driving states’ costs even higher. So Congress decided to pick up a larger share than usual of the cost of Medicaid, a program it administers in partnership with the states. 

With hindsight we know that, thankfully, things turned out rather differently. Although job losses were large and swift, so was the rebound to full employment. While states saw a temporary decrease in revenues, it was softer and shorter-lived than expected. In fact, nearly every state soon experienced an unprecedented revenue surplus. Those that didn’t blow it, like Georgia, are still enjoying the revenue boom. (Those that did, like California, are right back in the fiscal mess they faced prior to the pandemic.)

Again, that’s with the benefit of hindsight. Still, a related provision in the law continues to cause problems even now.

In exchange for the higher federal matching funds, states had to agree not to review the eligibility of Medicaid recipients. Now the higher match rate is scheduled to phase out, and the moratorium on reviewing recipients’ eligibility is also due to go away.

In a letter to President Joe Biden last month, 25 governors (including Georgia’s Brian Kemp) pointed out that this no-review policy has led to 20 million additional Medicaid enrollees since the pandemic began, a 30% increase.

“Making the situation worse, we know that a considerable number of individuals have returned to employer sponsored coverage or are receiving coverage through the individual market, and yet states still must … account and pay for their Medicaid enrollment in our non-federal share. This is costing states hundreds of millions of dollars.”

So the problem here is not that half a million Georgians are due to lose Medicaid coverage. It’s that they have been receiving coverage they are no longer eligible for. After all, anyone still eligible for the benefit will continue to receive it after the review.

Why does that matter? Well, some of us don’t believe in giving taxpayer-funded benefits to those who aren’t supposed to receive them. But even those with a more liberal approach to public benefits might note that spending money on the ineligible leaves less money for other programs, including those related to health. 

Underlying all of this, of course, is our long-running debate about single-payer health insurance funded by taxpayers. If that ultimately is the direction we are going to take, we should do so consciously. And not by constant extensions of a public health emergency and the emergency provisions that come with it.

In the end, this is another example of the poor governance that comes from governing by crisis.