Capitol Correspondence - 04.28.20

National Governors Association Asks Congressional Leadership for Aid – Including Higher FMAP

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States have been struggling to meet their financial obligations across the board during the coronavirus outbreak, leading the National Governor’s Association to request more support from Congress. Of note to our members, who are funded through the federal-state Medicaid partnership, the NGA requested a higher Federal Medical Assistance Percentage (FMAP) rate. While the Families First Coronavirus Response Act (FFCRA) created a 6.2 percent FMAP increase, the NGA finds that states are still overwhelmed by the outbreak. As written in the letter:

“COVID-19 is both a public health and economic emergency. As noted in our previous supplemental request letter, governors continue to seek a temporary increase in Federal Medical Assistance Percentages (FMAP) from 6.2 percent to 12 percent, to help address the needs of Americans who have lost their jobs and employer-sponsored health insurance due to COVID-19. This increase should apply to states and territories that expanded Medicaid.

The temporary 6.2 percent FMAP increase in the Families First Coronavirus Response Act (Pub. L. 116-127), is half of the average 12 percent FMAP increase states received from the 2009 Recovery Act. Governors request that the 12 percent FMAP be retroactive to Jan. 1, 2020, and remain until Sept. 30, 2021, regardless of unemployment conditions. After Sept. 30, 2021, the 12 percent FMAP increase should not be reduced until the national unemployment rate falls below 5 percent. Governors also request additional FMAP increases be determined based on the increase in a state’s unemployment rate.

Additionally, governors continue to urge that the Medicaid Fiscal Accountability Rule be rescinded. We believe this rule will lead to unintended consequences that would negatively impact Medicaid beneficiaries across the country.” [ANCOR note: we also have concerns about the Medicaid Fiscal Accountability Rule, which we shared in our comments to the Department of Health and Human Services (HHS).]

The bigger picture: The Congressional Budget Office has found that the economy will likely remain contracted “for some time”, underscoring the concerns laid out by governors above. As reported by Politico Pro:

“The current economic downturn will drag on for months, with double-digit unemployment rates rocking the labor market and a deficit ballooning to $3.7 trillion this year, the Congressional Budget Office said in a grim projection Friday.

The independent budget agency estimated that the unemployment rate will rise to 16 percent later this year, dropping to 9.5 percent by the end of 2021. By that time, the labor force will have ‘about 6 million fewer people,’ CBO noted.

Improvements in the economy are forecast beginning in the third quarter of this year, but a ‘sharp contraction’ will persist through the end of June, the agency said. ‘In the third quarter, economic activity is expected to increase, as concerns about the pandemic diminish and state and local governments ease stay-at-home orders, bans on public gatherings, and other measures restraining economic activity,’ CBO said.

‘However, challenges in the economy and the labor market are expected to persist for some time. Interest rates on federal borrowing are expected to remain quite low in relation to rates in recent decades.’

The agency’s sobering appraisal of the near-term job market comes after unemployment claims skyrocketed to 26 million over the last five weeks, with 4.4 million claims added in the last week. The pandemic has both physically sidelined Congress and dominated the legislative agenda, with lawmakers enacting four separate bills in the last month totaling more than $2.7 trillion.”