Congressional Research Service Warns Some States’ Budget Reductions During COVID-19 Recession Could Impact Medicaid

We share this report by the Congressional Research Service (CRS) because it discusses the funding landscape for Medicaid programs during the pandemic. As our members know, Medicaid is the largest funder of disability programs in the United States.

As reported by CRS: “Even with the [Families First Coronavirus Response Act] FFCRA FMAP increase, some states are developing budget reduction plans that could impact Medicaid programs. Usually, states’ options for reducing Medicaid expenditures include no longer covering optional benefits or populations, reducing provider rates, or imposing Medicaid provider taxes. During the current recession, a couple of these options are more difficult than they have been in the past. Reducing Medicaid provider rates has been an option states have favored in the past, because the reduction does not directly affect Medicaid enrollees and the savings from provider rate reductions impact the state budget relatively quickly. However, during the pandemic, some Medicaid providers, such as physicians or clinics, have experienced revenue losses due to lower utilization of services (e.g. preventive services), as other providers, such as certain hospitals and nursing homes, have experienced increased costs during the pandemic. Reductions to Medicaid provider rates might put additional financial stress on both sets of providers.”

CRS is a nonpartisan staff shared by congressional committees and members of Congress. It operates solely at the behest of and under the direction of Congress. Information in a CRS report should not be relied upon for purposes other than public understanding of information that has been provided by CRS to members of Congress.