Around the country, states are seeing dramatic increases in Medicaid enrollment as furloughed workers and their dependents lose their job-based health insurance and turn to Medicaid for coverage during the coronavirus pandemic.
Since March, West Virginia has seen an increase in Medicaid enrollment of approximately 24,000 people, but that is only the tip of the iceberg. Of the approximately 130,000 West Virginians who’ve lost their health coverage during this crisis, many are likely eligible for Medicaid and could sign up any time for the program. One analysis estimated that anywhere from 69,000 to 143,000 West Virginians could newly enroll in Medicaid over the next several months.
And the economic and job effects of COVID-19 are not over. The nonpartisan Congressional Budget Office estimates that national unemployment will still be as high as 9.5% at the end of 2021 — nearly as high as at the height of the last recession, which began in 2008.
A recent national analysis estimated that, by January 2021, nearly 17 million new Americans will be eligible for Medicaid. Policymakers must be prepared for a drawn-out recovery for West Virginia and the rest of the country, with years until jobless numbers go back to where they were prior to the COVID-19 crisis. We can expect that, over this time, thousands more West Virginians will need Medicaid health coverage to stay healthy.
As West Virginia’s fiscal year comes to a close, the state is facing a $236 million budget gap that could grow even larger in the month of June. With a constitutional requirement to balance the budget each year, money will have to be found or services and programs will need to be slashed to close the gap. Gov. Jim Justice and some legislators have signaled that they plan to fill the gap with Medicaid money, an ill-conceived plan amid sky-high unemployment and a global health crisis.
We know that during economic downturns, people enroll in Medicaid after job and income loss. Demand for Medicaid increases just as state revenue falls. Earlier this year, West Virginia, like many other states, anticipated flat Medicaid enrollment in the near term because of expectations of a strong economy. As such, it did not increase the budget at all for the program, except to provide funding for clearing the waiting list for the intellectually and developmentally disabled, or I/DD, waiver and other small benefit changes.
Now, the state is likely to see much higher Medicaid costs than expected in the coming months. This demand will come just as state revenue falls, making our Medicaid surplus money critical to maintaining health coverage for our residents struggling through an economic downturn. While the federal Families First Coronavirus Response Act did boost the federal match for our Medicaid program, it likely will not be sufficient to offset the increased need, nor will it span the length of what will be a years-long economic recovery.
In fact, the FFCRA sent less federal Medicaid money to the states than was sent in the federal response to the 2008-09 recession, when West Virginia faced less than one-sixth of the job losses we’ve seen over the past three months.
Policymakers must prepare for the inevitable spike in Medicaid enrollment, which includes protecting our Medicaid money for health care. Instead of using Medicaid funds to close the 2020 fiscal year budget gap, we could tap the state’s Rainy Day Fund. Although using this fund has implications for our state’s bond rating, it’s important to balance that concern with the obvious growing need for Medicaid.
Additional options could be to delay or reverse scheduled tax reductions and to shift federal CARES Act money to allowable expenditures the state is covering. Medicaid has long been where lawmakers go to fill budget gaps but, during a global health crisis, that would be an impractical and harmful strategy.
Keeping Medicaid money flowing through our economy is imperative for residents who face serious health challenges, as well as our state’s hospitals and health care providers, who we depend on more than ever to be able to serve residents and provide jobs. Additionally, we must have a clear picture of fiscal year 2021 revenue estimates, so our federally elected officials may advocate for us in the next phase of COVID-19 response legislation and ensure that cuts to health care, jobs and critical public services won’t be necessary in the coming months.