Reforming Medicaid Reimbursement before the Next Pandemic

5 Pages Posted: 11 May 2020

See all articles by Charles Blahous

Charles Blahous

Mercatus Center at George Mason University

Elise Amez Droz

George Mason University - Mercatus Center

Date Written: April 29, 2020

Abstract

On March 18, Congress enacted the Families First Coronavirus Response Act, the first economic relief bill in response to the pandemic. It mandates that state Medicaid programs cover diagnosis and testing for COVID-19 at no cost to beneficiaries and includes a temporary, conditional 6.2 percentage point increase in federal Medicaid reimbursement rates. This bill is an appropriate response to emergency conditions, during which delivering these necessary health services is the highest priority, while also providing states with desperately needed financial relief.

The effectiveness of this temporary reimbursement increase is, however, less than it could or should be, in large part because federal reimbursement rates were already inflated and distorted before the crisis as a result of provisions of the Affordable Care Act (ACA). These provisions have increased the cost of caring for individuals on Medicaid, especially in states that expanded Medicaid coverage to individuals who were ineligible for the program before enactment of the ACA. Before the next crisis hits, the federal Medicaid reimbursement structure needs to be rationalized.

Keywords: Medicaid, entitlement programs, Affordable Care Act, economic relief, healthcare, coronavirus, coronavirus pandemic, COVID-19, public health, economics, quarantine, economy, economic crisis

JEL Classification: I00, I18, H51, H75, H55, H50, J14

Suggested Citation

Blahous, Charles and Amez Droz, Elise, Reforming Medicaid Reimbursement before the Next Pandemic (April 29, 2020). Mercatus Special Edition Policy Brief, Available at SSRN: https://ssrn.com/abstract=3596330 or http://dx.doi.org/10.2139/ssrn.3596330

Charles Blahous (Contact Author)

Mercatus Center at George Mason University ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

Elise Amez Droz

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

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