States Warn of Medicaid Cuts Without Additional Federal Matching Funds

According to Morning Consult, state Medicaid agencies, including Pennsylvania’s, are likely to cut Medicaid provider rates, increase cost-sharing, or curtail health benefits if they do not receive increased federal matching funds to balance their budgets due to the pandemic. Congress increased Federal Medical Assistance Percentage (FMAP) matching funds for Medicaid by 6.2 percentage points, despite states urging to increase matching by at least 12 percentage points to help stabilize their programs during the COVID pandemic. As Medicaid enrollment continues to increase (enrollment in Pennsylvania’s reached an all-time high last month) and an additional COVID-19 relief bill looks unlikely to pass this year, states will look to Medicaid cuts to close budget shortfalls.     

To be clear, Pennsylvania’s Department of Human Services has not made cuts and is monitoring how the pandemic affects its budgets and health care programs.  A more generous FMAP increase has been on the table during coronavirus relief negotiations, and the offices of Sens. Bob Casey (D-Pa.) and Michael Bennet (D-Colo.), who have both called for increased Medicaid funding in recent months, said to Morning Consult that it’s critical an FMAP bump be included in the next bill.    

Congress is “running out of time to do something really meaningful, and states are going to be left with very few options,” said Matt Salo, executive director of the National Association of Medicaid Directors, adding that if nothing is done in the next six months or so,  “it’s just going to be a bloodbath.”   

Readers may recall that Pennsylvania budgeted five months (through the end of November) of funding for operations and programming throughout state government.  State lawmakers are expected to discuss and negotiate soon revenue and spending for the remainder of fiscal year 2021.  PHLP is monitoring these developments and their impact on Pennsylvania’s Medicaid program and will keep readers informed.