Medicaid: The Port in a Storm for Children and Families
September 11, 2017
As Harvey and Irma remind us, natural disasters happen. And when they do, they threaten the health of children and families and the ability of providers to deliver needed services. It takes time for displaced families, providers, and communities to get back on their feet. It also takes resources. While federal Medicaid funds are always an importance source of support for children and families, providers, and communities, they are particularly critical in the aftermath of a natural disaster.
We don’t yet know the full scope of the devastation wreaked by Harvey on Texas or Irma on Florida. But we do know, based on our experience with Hurricane Katrina in 2005, that in the affected communities there will be massive dislocation due to the destruction of homes and businesses. Children and families will be forced to evacuate; small businesses (including providers) will be forced to close or lay off workers; unemployment will increase; and parents and children will lose their private insurance coverage.
Obviously, Medicaid can’t unwind Harvey’s or Irma’s devastation by itself. But it is an automatic stabilizer that can help facilitate recovery in two important ways. First, children and families who are currently enrolled in Medicaid continue to be enrolled unless their incomes increase too much or they evacuate the state altogether. Second, children and families who lose income due to unemployment can qualify for Medicaid until they are able to find employment; federal funds are automatically available to help pay for the costs of new enrollees. (Of course, because most eligible children and parents do not have to pay premiums to enroll or pay cost-sharing for the medical care they need, Medicaid frees up what little income they have for shelter and other basics.)
In both cases, the effect of Medicaid coverage is to reduce the number of uninsured, which in turn reduces the amount of uncompensated care that providers must furnish. In a natural disaster, hospitals, nursing homes, pharmacies, outpatient clinics, and individual practitioners are all at risk for damage to or destruction of their physical facilities and loss of patient revenues. The disruption in revenue streams in turn undercuts their ability to repair or replace their facilities and avoid laying workers off. Uncompensated care does not help providers or their communities recover; Medicaid payments do.
Not to put too fine a point on it, but Texas and Florida could further reduce the number of uninsured, and the amount of uncompensated care its providers have to absorb, by expanding Medicaid to all parents and other adults under age 65 with incomes at or below $28,180 for a family of three and $16,643 for an individual. The federal government would pay 94% of the cost next year, 93% of the cost the year after that (the regular Medicaid matching rate for Texas will be about 57% in FY 2018; for Florida, about 62%). Because Congress did not “repeal and replace” the Affordable Care Act, this Medicaid expansion option is still available to Texas, Florida, and all other states. It would certainly help hard-hit families and providers get back on their feet.
Making Medicaid work to its potential in a disaster scenario is not without its operational challenges. Most importantly, federal Medicaid matching funds are only available if a state first spends its own funds. The economic dislocation of a Harvey and Irma reduce state revenues, especially in states like Texas and Florida, which do not have an income tax. Enrolling newly unemployed families in Medicaid is difficult when eligibility offices have been flooded. If children and families currently enrolled in a Medicaid managed care organization are forced to evacuate to other parts of the state, that MCO’s service area may not extend to the new community. The provider network of the MCO serving that community may not be sufficient to absorb a large influx of evacuees. And if they are forced to evacuate to other states, additional eligibility and financing issues arise.
These and other operational problems are solvable if CMS, the states, and the MCOs want to solve them. And the reason they are solvable—wait for it—is that there is no cap on federal payments to Texas or Florida or any other state. When a state is hit with a natural disaster and has to spend more of its own funds in order to cover those displaced from their homes and their jobs, federal Medicaid matching funds are automatically available without limit. Of course, a state can always seek additional federal assistance, but it does not need to worry about whether the federal government will share in the cost of stemming the coverage losses and increases in uncompensated care that would result if Medicaid were not there.
Over the past 7 months, strenuous efforts were made in Congress to cap federal Medicaid payments to states in perpetuity. Fortunately these efforts failed, at least for now. At some point in the future, they are likely to resume. And when they do, it will be important to remember the fundamental lesson of Harvey, Irma and Katrina: children and families, their providers, and their communities are far better off when the federal government shares in the costs of Medicaid with the states on an open-ended basis. There is never a good time for the federal government to shift the costs of health and long-term care to states. But to do so knowing that natural disasters happen, and when they happen children and families are at risk, would be indefensible.
originally posted here: https://ccf.georgetown.edu/2017/09/11/medicaid-the-port-in-a-storm-for-children-and-families/
Comments