An Unfunded Mandate? Medicaid Continuous Coverage Requirements and State Fiscal Burdens During COVID-19 -- by Jeffrey Clemens, Anwita Mahajan

At the COVID-19 pandemic's onset, the federal government enacted substantial changes impacting both the revenues and expenditures connected to states' Medicaid programs through a pair of provisions in the March 2020 Families First Coronavirus Response Act. These included a 6.2 percentage point increase in states' Federal Medical Assistance Percentages (FMAP), which raised states' revenues, contingent on adherence to a continuous coverage requirement. The latter provision raised expenditures by preventing the disenrollment of individuals whose eligibility would otherwise have lapsed due to changes in income or other eligibility-relevant circumstances. While these provisions were ex-ante expected to result in expenditures and costs of similar magnitudes, the ex-post realizations remain unquantified. Nationwide, we estimate that states’ share of the continuous coverage provision's costs was $139.2 billion, which is roughly $11.0 billion less than the revenues states received, in aggregate, through increased FMAPs. Revenues and costs varied substantially across states, however, with costs exceeding revenues by as much as $594 per capita, and revenues exceeding costs by as much as $838 per capita. The baseline parameters governing the federal government's share of states' Medicaid expenditures emerge as a key driver of the extent to which the continuous coverage requirement can be viewed as an unfunded federal mandate.