Patients Could Still Be on the Hook for Outpatient Costs, Costs If They Test Negative, and Cost Sharing

A new KFF analysis estimates that between 670,000 and 2 million uninsured people around the country eventually could be hospitalized with COVID-19, the respiratory disease caused by the novel coronavirus. Reimbursing hospitals for those treatments could cost between $13.9 billion and $41.8 billion.

Trump administration has indicated that it plans to reimburse hospitals for the care of uninsured COVID-19 patients through the $100 billion fund authorized by Congress for hospitals and other health care entities as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act.  Reimbursing hospitals for these costs would consume as little as 14% to more than 40% of the special fund, according to the KFF analysis. There is a wide range of uncertainty surrounding the estimates, driven by uncertainty around what share of the population will ultimately become infected.

“Covering COVID-19 hospital costs for patients who are uninsured would give them peace of mind that their inpatient costs will be covered,” KFF President and CEO Drew Altman said. “While the details are spotty, uninsured patients could still be on the hook if they test negative for coronavirus and if they receive care outside hospitals.”

The estimates are based on existing data and information about the coronavirus’s anticipated spread, how often it leads to hospitalization, the number of uninsured people, and Medicare payment rates for respiratory infections and inflammations and respiratory illnesses requiring ventilator support.

The analysis highlights outstanding questions about how the federal government will help offset the bills that uninsured patients could receive, including whether the federal government reimburses physicians who treat uninsured COVID-19 patients in hospitals and treatment for patients with conditions that resemble COVID-19 who ultimately test negative for coronavirus. The policy also would not protect privately insured patients from cost-sharing and balance billing from hospitals and providers.

The COVID-19 outbreak will likely disproportionately affect communities of color in both their health and their pocketbooks, compounding longstanding racial disparities in health and economic conditions, according to a new KFF analysis.

While comprehensive data about how the COVID-19 crisis is unfolding are not yet available, early data from some areas suggest groups of color are experiencing disproportionate health and economic impacts. As of April 6, to cite a few examples:

• In Illinois, groups of color accounted for 48 percent of confirmed cases and 56 percent of deaths, while only making up 39 percent of the state’s population.
• In Louisiana, Blacks are 32 percent of the state’s population, but accounted for over 70 percent of COVID-19 deaths.
• In Michigan, although Blacks make up 14 percent of the population, they accounted for 33 percent of confirmed COVID-19 cases and 41 percent of deaths.
• In North Carolina, Blacks are 21 percent of the population, but accounted for 37 percent of confirmed COVID-19 cases
• In Washington D.C., Blacks accounted for 59 percent of COVID-19 deaths, while making up 45 percent of the district’s population

The new numbers stand alongside existing data that suggest that many people of color are at increased risk for experiencing serious illness if they contract COVID-19 due to higher rates of certain underlying health conditions such as diabetes and asthma compared to Whites. Nonelderly Black, Hispanic, and American Indian and Alaska Native adults are more likely than Whites are to report fair or poor health, according to KFF analysis of federal survey data.

People of color also are more likely to be uninsured and to lack a usual source of care, which could translate into increased challenges accessing COVID-19 testing and treatment services. Among the nonelderly, 22 percent of American Indians and Alaska Natives lacked health coverage in 2018, as did 19 percent of Hispanics and 11 percent of Blacks, compared to 8 percent of Whites.

Moreover, people of color are more likely to work in certain industries (such as restaurant, hospitality, retail and other service industries) that are particularly at risk for loss of income right now, but have limited ability to absorb these decreases due to lower incomes. Over a quarter of Blacks, Hispanics, and AIANs are low-wage workers, compared to less than 17 percent of Whites.

For the full analysis, as well as other data and analyses about the coronavirus and COVID-19, visit kff.org.

The KFF Coronavirus Poll conducted in March 11-15, 2020 found that there were some gender differences in how men and women were experiencing the pandemic, with women more likely to worry about both the health and economic effects on their families, and more likely to report taking protective actions.

As the virus and its consequences have spread across the country, the latest KFF Health Tracking Poll, conducted March 25-30, 2020 finds many of these gender differences persist, and at least one has widened considerably. Women remain somewhat more likely than men to say their lives have been disrupted “a lot” by the outbreak (49% vs. 40%). And while self-reported social distancing measures have increased dramatically for everyone, women are more likely than men to say they’ve stayed home instead of going to work or other regular activities (81% vs. 69%), changed or canceled travel plans (72% vs. 66%), or sheltered in place (88% vs. 76%).

One gender gap has gotten strikingly larger over this two-week period, particularly among parents. Women overall are now 16 percentage points more likely than men to say that worry or stress related to coronavirus has had a negative impact on their mental health (53% vs. 37%). Among parents of children under age 18, the gender gap is a striking 25 percentage points; 57% of mothers vs. 32% of fathers say their mental health has gotten worse because of the pandemic. In the poll taken just two weeks prior, the gender gap among all adults was 9 percentage points (36% vs. 27%) and among parents it was just 5 percentage points (36% vs. 31%).

The gender gap in self-reported coronavirus stress is not surprising given what we know from prior research on gender roles, family caregiving responsibilities, and women’s workforce participation.  KFF surveys have consistently found that moms take the lead roles in managing family health and that working moms are more likely than dads to stay home (often without pay) when kids are sick. The safety net for working moms when their kids get sick often has been friends and family, but the COVID outbreak and resultant social distancing and stay at home orders have taken these options off the table for many. Other research conducted before the outbreak found that women still shoulder the majority of housework, are more likely to be the primary caregivers for frail and aged family members than men, and have a baseline of experiencing anxiety and depression at greater rates than men. All these factors add stress to women’s lives under normal circumstances; the current crisis requires many moms to be teachers, nurses, and family mediators at home with little respite, with many also continuing to manage workplace responsibilities.

As social distancing measures and shelter-in-place orders become more widespread, along with job losses and school closures that lead to increased economic anxiety and increased demands on parents’ time, KFF will continue tracking the self-reported mental health effects of these pressures on both women and men.

In late March many news organizations reported on crowded beaches and revelry among U.S. college students with headlines such as, “Spring breakers say coronavirus pandemic won’t stop them from partying.” Our most recent KFF Health Tracking Poll finds that for a majority of young adults, life has changed drastically and perhaps, the parties have stopped…for now.

Seven in ten (71%) 18-24 year olds say their lives have been disrupted because of the recent coronavirus outbreak. This share is comparable to the share who report the same among 25-44 year olds (74%), 45-64 year olds (76%), and those 65 and older (63%).

And while those news stories of a few weeks ago portrayed younger adults as not heeding precautions and continuing going on spring break trips, the data indicates that many younger adults now report changing travel plans because of coronavirus (72%). Even more, the vast majority of 18-24 year olds report that they have been engaging in at least one form of social distancing (95%). The poll does find that fewer 18-24 year olds (77%), but still a majority, report “sheltering-in-place,” or not leaving their homes except for essential services such as food, medicine, and health care.

Younger adults are also just as likely as their Millennial and Gen-X counterparts to report that worry and stress related to coronavirus has had a negative impact on their mental health (58% compared to 49% of 25-44 year olds and 47% of those ages 45-64). Adults ages 65 and older are less likely to report negative mental health impacts (31%).

While four in ten 18-24 year olds are enrolled in either a 2-year or 4-year college according to the most recent data from the National Center for Education Statistics, most 18-24 year olds are also working either in a part-time or full-time capacity. At least one-third of both college-aged adults and their older counterparts (25-44 year olds) say they have lost their job, been laid off, or had their hours reduced without pay because of coronavirus (33% and 36%, respectively compared to 29% of 45-64 year olds and 13% of those 65 and older). In addition, seven in ten (71%) 18-24 year olds are worried they will put themselves at risk of exposure to coronavirus because they cannot afford to stay home and miss work (compared to 60% of 25-44 year olds, 59% of 45-64 year olds, and 43% of those 65 and older).

So, while some college students were slow to heed social distancing recommendations, just a few weeks later most young adults are now reporting taking precautions to protect themselves, and this group is already feeling the impact of coronavirus both on their mental health and on their paychecks.

By late-February, it became increasingly clear that sustained community transmission of coronavirus had taken hold in parts of the United States, particularly on the West Coast and, soon after, the New York City region. With little testing available and no significant federal response beyond instituting international travel restrictions at the time (the President downplayed the threat of COVID-19 well into March), some jurisdictions took matters into their own hands and began implementing social distancing measures.

On March 4, King County officials in Washington State first recommended that certain vulnerable groups (including people over 60 years old and those with underlying health conditions) stay home, businesses allow more telecommuting options, and the cancellation or postponement of large public events; school closures began in parts of the state within a couple of days. On March 6, San Francisco similarly warned vulnerable residents to avoid outings and larger groups, businesses to suspend non-essential travel and consider telecommuting, and cancelation of all non-essential large events, and the city began restricting event size a few days later. By March 16, six Bay Area counties became the first in the nation to announce shelter-in-place orders and on March 19, the State of California became the first to mandate a state-wide order.

Since then, additional states and communities across the country began implementing mandatory stay-at-home orders (and other social distancing measures, including school closures, many of which began state-wide on March 16, and closing non-essential businesses).  But, with conflicting messages from the federal government and a lack of clear guidelines, states have not been on the same page, and implementation has been scattershot at best. In some cases, contiguous states have had different policies (such as South Carolina, which has no mandate and North Carolina which does). Moreover, in some states (including those with rapidly rising caseloads), Governors resisted issuing state-wide orders, leaving decisions up to local jurisdictions, creating confusion and concern and prompting calls from local officials and public health experts for state-wide action.  This was the case, for example, in Florida, Georgia, and Texas until recently and remains so in a handful of other states.  It’s hard to see how a highly infectious virus is going to pay very close attention to different policies across states, let alone within them. Indeed, new data shows that there was more travel in counties without such orders.

There have been some exceptions to this. In recognition of regional commuter and other patterns, Washington DC, Virginia and Maryland have operated much more in lockstep (although there have been some differences). All three implemented similar voluntary state-at-home orders during the third week of March and a coordinated mandatory one announced on March 30. In the Mayor of DC’s voicemail message to residents, she specifically said, “pandemics don’t care about borders. That’s why we are all doing the same thing and we are telling everyone in the Capital Region – DC, Maryland, and Virginia – please stay home.”

Still, by March 25, when there were more than 12,000 cases reported in the U.S., only 19 states had mandatory stay-at-home orders in effect. An additional 11 instituted orders taking effect by March 30. The recent announcement by the White House that federal social distancing guidelines would be extended through at least April 30, an acknowledgment that the outbreak is significantly worse than it had previously suggested, is likely to lead to more uniformity across states. Already, since the announcement, several additional states have announced their intention to implement stay-at-home orders. Many states have gone well beyond the White House guidance, which is a recommendation, not a requirement. At the time of this writing, 9 states had not yet issued state-wide orders.

It is still too early to know whether those states that implemented such measures earlier will see better outcomes (although data from both Seattle and San Francisco suggest that they are working) or whether differential implementation across the country and within states will affect the success of all communities, as the virus may continue to spread across geographic borders it doesn’t recognize. At the very least, this scattershot approach can result in ongoing transmission in one state or community, even as transmission is interrupted in a neighboring area. This could extend the period of spread for the U.S. overall and prolong the need for social distancing in much of the country. We are engaged in a “natural experiment” of differing approaches to the epidemic on a massive scale, and we are likely to see over the coming weeks what the consequences of that will be.

Click here to download table (.xls)

Every Friday we’ll recap our new policy analysis, polling, and updates on coronavirus from the past week.

Here’s the latest coronavirus stats from KFF’s tracking resources:

Global Cases: This week total cases worldwide passed 1 million – with 1,013,039 cases and 52,980 deaths.

U.S. Cases: There have been 141,511 new cases and 4,333 deaths in the U.S. since March 27^th. This week total cases nationwide passed the 250,000 mark.

STATEWIDE ACTIONS TO MITIGATE THE SPREAD OF COVID-19 (includes Washington D.C.):

• Stay At Home Order: 39 statewide orders, 2 orders for high-risk groups only, other action in 1 state, no action in 9 states
• Mandatory Quarantine for Travelers: 9 orders for all travelers, 1 order for all air travelers, 5 for travelers coming from certain states, other action in 1 state, no action in 35 states
• Non-Essential Business Closures: 33 orders to close all non-essential businesses; 4 orders to close all non-essential retail businesses, other action in 5 states, no action in 9 states
• Large Gatherings Ban: All gatherings prohibited in 18 states, gatherings of 10+ people prohibited in 25 states, gatherings of 50+ prohibited in 1 state, other action in 4 states, no action in 3 states
• State-Mandated School Closures: Closures in 49 states, schools effectively closed in 2 states
• Bar/Restaurant Limits: Closed except takeout/delivery in 46 states, limited on-site service in 3 states, other action in 1 state, no action in 1 state

STATE COVID-19 HEALTH POLICY ACTIONS

• Waive Cost Sharing for COVID-19 Treatment: 2 states plus D.C. require, state-insurer agreement in 1 state; no action in 47 states
• Free Cost Vaccine When Available: 9 states require, state-insurer agreement in 1 state, no action in 41 states
• States Requires Waiver of Prior Authorization Requirements: For COVID-19 testing only in 6 states, for COVID-19 testing and treatment in 4 states, no action in 41 states
• Early Prescription Refills: State requires in 16 states, no action in 35 states
• Premium Payment Grace Period: Grace period extended for all policies in 7 states, grace period extended for COVID-19 diagnosis/impacts only in 5 states, no action in 39 states
• Marketplace Special Enrollment Period: Marketplace special enrollment period in 12 states
• Paid Sick Leave: 13 states enacted, 2 proposed, no action in 36 states

APPROVED MEDICAID STATE ACTIONS TO ADDRESS COVID-19

• Approved Section 1135 Waivers: 45 total
• Approved Medicaid Disaster Relief SPAs: 2 total
• Approved 1915 (c) Appendix K Waivers: 16 total

Here’s the latest KFF COVID-19 resources published since last Friday:

• Is Contact Tracing Getting Enough Attention in U.S. Coronavirus Response? (Blog Post)
• COVID-19: Expected Implications for Medicaid and State Budgets (Blog Post)
• Long-Term Trends in Employer-Based Coverage (Issue Brief)
• COVID-19 Coronavirus Tracker – Updated as of April 3, 2020 (Interactive)
• State Data and Policy Actions to Address Coronavirus (Issue Brief)
• Medicaid Emergency Authority Tracker: Approved State Actions to Address COVID-19 (Issue Brief)
• KFF Health Tracking Poll – Early April 2020: The Impact Of Coronavirus On Life In America (Poll Findings, News Release, Blog Post )
• Problems Getting Care Due to Cost or Paying Medical Bills Among Medicare Beneficiaries (Issue Brief)
• COVID-19: Expected Implications for Medicaid and State Budgets (Blog Post)
• COVID-19 Coronavirus Tracker – Updated as of April 3, 2020 (Interactive)
• Why the U.S. Doesn’t Have More Hospital Beds (Axios Column)
• Put to the Test: Can the U.S. Get to the Next Phase of the COVID-19 Response? (Blog Post)
• A Look at the $100 Billion for Hospitals in the CARES Act (Blog Post)
• Jen Kates and Josh Michaud Featured Speakers in Virtual Briefing About the Coronavirus Pandemic (Blog Post)
• Update: Coronavirus Puts a Spotlight on Paid Leave Policies (Issue Brief)
• FAQs on Medicare Coverage and Costs Related to COVID-19 Testing and Treatment (Issue Brief)
• New KFF State Survey Data Provide a Benchmark for Measuring State Responses to COVID-19 (Blog Post)
• What People (and Policymakers) Can Do About Losing Coverage During the COVID-19 Crisis (Blog Post)
• N. SG Launches ‘Shared Responsibility, Global Solidarity’ Report As U.N. GA Considers Rival Resolutions On COVID-19 Response (KFF Daily Global Health Policy Report)

The latest KHN COVID-19 stories:

• Medicaid Nearing ‘Eye Of The Storm’ As Newly Unemployed Look For Coverage (KHN, USA Today)
• Trump Touted Abbott’s Quick COVID-19 Test. HHS Document Shows Only 5,500 Are On Way For Entire U.S. (KHN, Daily Beast)
• Pandemic-Stricken Cities Have Empty Hospitals, But Reopening Them Is Difficult (KHN)
• California Hospitals Face Surge With Proven Fixes And Some Hail Marys (KHN)
• As The Country Disinfects, Diabetes Patients Can’t Find Rubbing Alcohol (KHN, USA Today)
• KHN’s ‘What The Health?’: All Coronavirus All The Time (Podcast)
• Under Pressure, Florida Governor Finally Orders Residents To Stay Home (KHN)
• Fox News’ Jesse Watters Said Travel Bans ‘More Critical In Saving Lives’ Than COVID Testing. He’s Wrong. (KHN)
• Listen: COVID-19 Stresses Rural Hospitals Even Before They Have A Single Case (Radio Appearance)
• Listen: Why It Takes So Long To Get COVID-19 Test Results (Radio Appearance)Analysis: He Got Tested For Coronavirus. Then Came The Flood Of Medical Bills. (KHN, New York Times)
• Red Dawn Breaking Bad’: Officials Warned About Safety Gear Shortfall Early On, Emails Show (KHN, Daily Beast)
• What Takes So Long? A Behind-The-Scenes Look At The Steps Involved In COVID-19 Testing (KHN, NPR)
• Online Coronavirus Tests Are Just The Latest Iffy Products Marketed To Anxious Consumers (KHN, The Guardian)
• ‘Essential’ Or Not, These Workers Report For Duty (KHN)
• Temperature Check: Tips For Tracking A Key Symptom Of Coronavirus Contagion (KHN, New York Times)
• With Coronavirus Rare In Rural Florida, Experts Dispute Way Forward (KHN, USA Today)
• Blood Centers Will Collect Plasma From COVID-19 Survivors In Bid For Treatment (KHN)
• Should You Bring Mom Home From Assisted Living During The Pandemic? (KHN, CNN)
• Coronavirus Patients Caught In Conflict Between Hospital And Nursing Homes (KHN, Daily Beast)
• Sheltered At Home, Families Broach End-Of-Life Planning (KHN, CNN)
• COVID-19 Bonanza: Stimulus Hands Health Industry Billions Not Directly Related To Pandemic (KHN, Fortune)
• More Than 5,000 Surgery Centers Can Now Serve As Makeshift Hospitals During COVID-19 Crisis (KHN)
• The Nation’s 5,000 Outpatient Surgery Centers Could Help With The COVID-19 Overflow (KHN)
• Already Taxed Health Care Workers Not ‘Immune’ From Layoffs And Less Pay (KHN)
• Addiction Is ‘A Disease Of Isolation’ — So Pandemic Puts Recovery At Risk (KHN)
• Listen: How Hospitals Are Preparing For Surge In COVID-19 Patients (KHN)

There is a consensus forming among public health experts about the kinds of capabilities that the U.S. needs to build up and apply in order for communities to successfully combat COVID-19 and transition from our current social distancing/sheltering-in-place moment to something resembling normal daily life. Think tank reports, many articles, and numerous op-eds from experts have all converged around putting certain key elements in place, such as:

• Greatly scaling up diagnostic testing capacity to identify cases;
• Growing the number of available hospital and intensive care beds;
• Increasing the availability and improving the distribution of necessary supplies, including personal protective equipment and ventilators; and
• Scaling up contact tracing and quarantining of close contacts of known COVID-19 cases.

The first three points on the list above are immediate needs and have been front and center in debates around COVID-19 response, from the White House daily press conferences to governors’ and Mayors’ discussions of the needs in their states and cities. However, the fourth point – contact tracing – has been emphasized much less. In three recent White House Coronavirus Task Force Press conferences, for example, the needs around testing, hospitals, and supplies such as masks and ventilators were mentioned dozens of times, while contact tracing was mentioned just once, in passing.

Contact tracing is the process of identifying, assessing, and managing people who have been exposed to a contagious disease to prevent onward transmission. It is a key component of infectious disease control and response. And, despite being mostly ignored in politicians’ press conferences to date, contact tracing is going to be a crucial piece of the puzzle for eventually suppressing and containing the virus, allowing people to congregate in public, and letting people go back to work again. Once social distancing measures have had the effect of turning the tide on local epidemics, contact tracing can then be used to identify and interrupt ongoing transmission chains and allow public health authorities to understand the extent of spread in a community. Effective contact tracing has been an essential component for successful coronavirus responses in other countries, including in China, South Korea, Singapore, and Germany.

However, the challenges facing a contact tracing effort here are daunting. For one, local public health departments, currently responsible for contact tracing efforts, are already stretched thin and in many cases overwhelmed by response needs, having been weakened by budget cuts for years. Undertaking contact tracing, even when coronavirus case numbers are falling, will still be a monumental effort. For example, if at least 750,000 tests per week are needed to have a decent chance of identifying most COVID-19 cases in the U.S. (as recommended recently by an expert group), and assume 10% of those tests are positive (a target benchmark cited by experts), that would mean 75,000 cases whose contacts would have to be investigated each week. This is similar to the scale of efforts in Wuhan, China in February, when 1,800 contact tracing teams of five people each traced tens of thousands of contacts each day. Hard to imagine there would be enough workers trained and equipped to do contact tracing in the U.S. in a few weeks’ time without a truly massive, nationally-coordinated scale-up effort.

To complicate things further, we know some proportion of asymptomatic and pre-symptomatic transmission occurs, making it that much harder to identify all cases to isolate, even with sufficient testing capacity. Newly published modeling suggests that, given the challenging characteristics of Covid-19 like asymptomatic transmission, the standard approach to contact tracing – with people calling and investigating all close contacts of identified cases – will likely face limitations in effectively interrupting enough community chains of transmission. What’s likely needed to supplement traditional contact tracing are more automated, technological approaches using mobile phones and apps. For example, notifications could be automatically pushed to other phones which were determined to have been in proximity to a known case, or an app could be created and pushed to people in affected geographic areas, which would automatically alert them if they may have been in contact with a case.  This approach is faster, and likely more effective. It has already been used in places that have been successful in interrupting the spread of disease such as China, South Korea, and Singapore.

Recognizing this, some private and academic groups have begun to create just these kinds of resources and push for digital participatory, crowd-sourced contact tracing, such as: NextTrace, Covid Watch, Trace Together, and Safe Paths. These initiatives are only starting to coordinate and get visibility. At the same time, concerns about privacy have already been raised and would need to be addressed if such a route were pursued.

Reasonably, only the federal government could truly bring order and achieve a national, coordinated effort on the scale (and expense) necessary to address the problem. It would require ensuring that most Americans are connected to the efforts through their phones and sufficient attention is given to privacy concerns that will undoubtedly arise. To date, however, and despite the fact that the CDC Director has indicated he expects to pursue aggressive early case definition, isolation, contact tracing in states that, thus far, have limited transmission, there is little evidence of a genuine federal effort to build up capacities to do this, or to bring together the valiant but scattershot efforts from the private sector. Even if a more widespread testing effort is, eventually, implemented, it is hard to see how the contact tracing gap will be easily closed.

As new unemployment claims hit 6.6 million as of March 28th due to coronavirus – and a total of about 10 million over a two-week period – it will become increasingly important to monitor what happens to individuals who lose income and may qualify for Medicaid or become uninsured and what this means for state budgets.

Medicaid is a countercyclical program, so during economic downturns more people lose income and will qualify for Medicaid. Medicaid spending is driven by multiple factors, including the number and mix of enrollees, medical cost inflation, utilization, and state policy choices. During economic downturns, enrollment in Medicaid grows. Looking back, we see peaks in Medicaid spending and enrollment growth in 2002 and 2009 due to recessions. The unemployment rate peaked at 10 percent in October 2009 during the Great Recession. Enrollment and spending also increased significantly following implementation of the Affordable Care Act (ACA) as Medicaid coverage expanded, but have moderated in more recent years (Figure 1).

Large increases in the number of uninsured experienced in the Great Recession may not be repeated because of new coverage options under the ACA. Given large expansions in coverage for Medicaid adults through the ACA Medicaid expansion and subsidized coverage through the ACA marketplace, more individuals will qualify for coverage and fewer will likely become uninsured. In 37 states (including D.C.) that adopted the ACA Medicaid expansion, adults can qualify if their current income is up to 138% of the federal poverty level (FPL), or $1,467/month for individual, $3,013/month for a family of four. However, state unemployment benefits do count as income, so to the extent that individuals lose their jobs and qualify for unemployment compensation, they may remain over the Medicaid income limit until those benefits run out. The additional unemployment compensation in recent legislation to address COVID-19 is disregarded for Medicaid eligibility. In some expansion states, adults with higher incomes qualify, and in all states eligibility levels are higher for children and pregnant women. People can apply year-round, and services provided up to 3 months prior to application can be covered retroactively if you would have been eligible then. Under the ACA, beginning in January 2020, the federal government pays 90% of the costs for the expansion group, above the regular match rate in all states.

In non-expansion states, individuals will not have the same coverage options and more people may become uninsured. More than 2 million poor uninsured adults below poverty don’t qualify for Medicaid and fall into the coverage gap because they live in one of 14 states that have not yet adopted the ACA expansion. While people may lose jobs and income, more people will be eligible to receive expanded unemployment benefits included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. People with incomes – including unemployment compensation – above the poverty level will qualify for subsidized coverage through the ACA marketplace.

States will experience large declines in revenue as needs for services, including Medicaid, grow. During the last recession, state revenues dropped significantly while spending growth continued, resulting in large budget gaps. Because states are required to balance their budgets, many states responded to the fiscal crisis by cutting spending. Most states enacted budget cuts to education, higher education, health programs, and state work force. Some states also increased revenues and relied on temporary measures such as borrowing, fund shifts, referred expenses, and asset sales. Some initial estimates show that states are already estimating share revenue declines and unemployment estimates could exceed those experienced in the last recession.

The current financing structure of Medicaid provides some protections for states facing higher Medicaid costs as a result of COVID-19 and changing economic conditions. The federal government jointly funds the Medicaid program with states by matching qualifying state Medicaid expenditures. When Medicaid spending rises during an economic downturn, these increased costs are shared by the federal government and there is no cap on available federal funds. Even with the federal match, states often turn to reductions in provider rates as well as cuts in some optional benefits. Often, these rates and benefits may be restored when economic conditions improve. States also frequently turn to greater reliance on provider taxes to help raise the state share of Medicaid during economic downturns. To the extent that more individuals qualify for the ACA Medicaid expansion group, those costs will receive the 90% ACA enhanced match.

Federal fiscal relief provided through the Medicaid FMAP during significant economic downturns has been successful in helping to support Medicaid and provide efficient and effective fiscal relief to states. To mitigate these budget pressures, Congress has twice passed temporary FMAP increases to help support states during economic downturns prior to the COVID-19 crisis, most recently in 2009 as part of the American Recovery and Reinvestment Act (ARRA). The ARRA-enhanced FMAP rates provided states over $100 billion in additional federal funds over 11 quarters, ending in June 2011. As a condition to receive the ARRA funds, states could not make eligibility or enrollment processes more restrictive. As a result of the ARRA-enhanced FMAP, state spending for Medicaid declined during the state fiscal years 2009 and 2010. The Families First Coronavirus Response Act included a temporary increase in the Medicaid FMAP from January 1, 2020 through the emergency period. The 6.2 percentage point increase does not apply to the expansion group. To be eligible for the funds, states cannot implement more restrictive eligibility standards or higher premiums than those in place as of January 1, 2020, must provide continuous eligibility for enrollees through the end of the month of the emergency period, and cannot impose cost sharing for COVID-19 related testing and treatment services including vaccines, specialized equipment, or therapies.

Looking ahead, the magnitude of the coverage changes as well as fiscal impact is expected to be even greater than the Great Recession. States could see increases in Medicaid enrollment and increases in costs for COVID-19 testing and treatment, at the same time that revenues are falling.