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Insights

States with Expanded Medicaid Have More Resources & Capabilities to Respond to COVID-19

The novel coronavirus has brought to the forefront numerous systemic failures in the U.S health care system. As the U.S attempts to control COVID-19, the economic woes facing the country are compounding the effects of the crisis. One key example of this can be seen in sharp reductions in employer sponsored health insurance coverage in the U.S. Preliminary estimates indicate that millions of Americans likely lost employer sponsored health insurance (ESI) as a result of job losses during the pandemic, a burden disproportionately felt by racial and ethnic minorities. Given these unprecedented circumstances, policymakers in states that have yet to do so should consider implementing Medicaid expansion to ensure equitable health care among vulnerable populations. 

Potential for Exacerbating Racial Disparities

Preliminary evidence suggests that racial and ethnic minorities have borne a disproportionate share of the medical and economic impacts of the pandemic, likely due in large part to persistent, systemic racial injustices in the nation’s public health infrastructure that predated COVID-19. Despite its role as a safety-net provider, some have argued that Medicaid itself has helped to perpetuate these disparities. For example, racial and ethnic minority individuals are more likely to be covered by Medicaid than their white counterparts, and are also more likely to end up in nursing homes and long-term care facilities where Medicaid is the primary payer (which typically have lower quality of care). Still, evidence suggests that despite possible underlying inequities inherent in its design, Medicaid expansion under the Affordable Care Act may help to reduce the systemic racial disparities in access to care

Medicaid Expansion and the ACA

A key component of  the Affordable Care Act’s (ACA) aim to cover 47 million uninsured Americans was an expansion of Medicaid benefits to previously ineligible populations.  Under the expansion, states have the option to extend coverage to individuals who earn up to 138% of the poverty limit (plus additional expanded coverage for children and families) with the federal government covering 90% of the cost for these newly enrolled individuals in 2020. Roughly 35.8% of unemployed adults receive Medicaid in expansion states, compared with 16.5% in non-expansion states

The health and economic effects of Medicaid expansion have been well documented. An examination of Ohio’s Medicaid expansion supported by RTI found that 75 percent of new enrollees were previously uninsured and many had previously undiagnosed health care needs. However, as of early September, only 38 states and D.C. have expanded Medicaid, the most recent of which (Missouri) by ballot initiative. This move is projected to expand access to 340,000 previously uninsured individuals. Still, there remain roughly 2 million individuals across the 12 states that have not expanded Medicaid who have no affordable health insurance option.

Medicaid’s Role in Responding to the Pandemic

As of the beginning of October, net job losses during the pandemic total 10.7 million. Job losses from February through July were worse than the 2008 Great Recession across 39 states. The resulting state budget shortfalls are projected to reach unprecedented levels as high as $555 billion cumulative through 2022. One estimate projects that, combined with specific COVID-19 relief included in the CARES act, states that have expanded Medicaid will receive an average of $557 more per resident in federal funding that can be used to respond to the pandemic compared to non-expansion states. Research indicates that non-expansion states face the pandemic with far fewer federal resources than expansion states have, and these additional resources may prove critical should federal policymakers fail to reach an agreement on further assistance to states.

Medicaid has played an important role in ensuring access to care for low-income populations during the pandemic. Enrollment in Medicaid increased nationwide as many found themselves unemployed and without income or health insurance. Many state Medicaid programs also implemented new policies for home and community-based services to ensure access to needed care during stay-at-home orders. These services, however, remain inaccessible to millions of uninsured Americans who live in states that have not expanded Medicaid—many of whom are also at increased risk of COVID infection and adverse outcomes due to socioeconomic factors.

Implications for the Future

To date, the federal response to the COVID-19 pandemic is projected to cover only a portion of the burden currently faced by states. While federal policymakers are considering several approaches to further mitigate this shortfall, a reasonable (and relatively low-cost) first step could be for  states that have not already done so  to authorize Medicaid expansion. This could help to reduce the strain felt by the health care systems in states that have not expanded Medicaid and ensure access and coverage for the newly unemployed and uninsured in a time of crisis and uncertainty. 

Historically, some of the most significant health care system reforms have followed times of great crisis (e.g., wars, social upheavals, financial crises).  Although disparities persist under the current Medicaid framework, embracing Medicaid expansion could lead to important gains in coverage and access, particularly now, as the demands on the US health care system continue to grow.