Medicaid Has a Case of Long Covid

Under emergency rules, states are paying billions for ineligible people

WSJ editorial.

"The economic recovery from the Covid-19 pandemic has been remarkable. April’s unemployment rates were at record lows in 17 states, and Friday’s labor report said the economy created 390,000 net new jobs in May. Yet America’s Medicaid program is suffering from long Covid.

In one of its 2020 aid bills, Congress temporarily boosted the federal government’s Medicaid contribution. As a condition to receive the extra money, states can’t disenroll Medicaid beneficiaries who become ineligible—only those who die, opt out or leave the state. This restriction lasts until the end of the official Public Health Emergency.

For now that’s mid-July, but news reports say the Biden Administration plans another extension, and it also has promised to give states 60 days notice. That might mean October at the earliest. By then, according to an estimate from the Foundation for Government Accountability (FGA), “states will have an estimated 98 million Medicaid enrollees, including as many as 23 million people no longer eligible.”

As with other makeshift pandemic assistance, such as the eviction moratorium, the media will focus on hardship cases. But the emergency has to stop sometime, and an economy with a 3.6% jobless rate is a good time to do it. The Labor Department also said this week there were 11.4 million job openings in April, with only about half that many available workers. 

Congress is free to make easier Medicaid eligibility rules permanent if it can find the votes, and the White House is free to argue for that. But an interminable emergency is bad policy, and dishonest as well, since the Medicaid change was passed to be temporary.

Since the federal Covid bonus vanishes with the emergency, states better be ready to make that transition. One question is whether Governors with tight labor markets will decide not to wait. At some point the extra federal Covid money under Medicaid might not be enough to cover the cost of carrying people who are ineligible but who can’t be removed from the rolls.

By October, “ineligible enrollees will cost taxpayers nearly $16 billion per month,” the FGA predicts, “with states picking up nearly $6 billion of those costs when the public health emergency ends.” State officials would be wise to think through what to do next, and remember that every dollar spent on an ineligible Medicaid beneficiary is a dollar that’s not spent on other priorities, including the most needy."