A Permanent Pandemic Means a Huge Medicaid Expansion

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Covid is now endemic, yet the Biden administration keeps extending the public-health emergency. Its goal is to preserve the expansion of the welfare state through Medicaid, even though large and growing numbers of enrollees are ineligible for the benefit.

Medicaid, the federal-state entitlement that provides health insurance to nearly 1 in 4 Americans, ballooned during the pandemic. Enrollments had declined in 2018 and 2019, but jumped by 15.9 million—about 25%—between February 2020 and February 2022. According to the Centers for Medicare and Medicaid Services, the increase was “due, in large part, to the continuous enrollment condition” in Congress’s March 2020 Covid relief package, which encouraged enrollments by temporarily increasing the federal government’s share of total Medicaid costs by 6.2% while prohibiting states that accepted Washington’s help from redetermining Medicaid eligibility and removing ineligible people from the rolls until the emergency ended.

In other words, so long as the emergency persists, so too does the expansion of the welfare state. More than two years later, the Biden administration is intent on making permanent what were meant to be emergency measures.

States routinely redetermine Medicaid recipients’ eligibility. As the program grows, so too do the chances for improper payment. Medicaid’s national improper-payment rate, which includes payments to ineligible beneficiaries, soared under the ObamaCare Medicaid expansion. The most recent rate, which incorporates three years of data through the first five months of the pandemic, reached an all-time high of 22%, a cost of $99 billion.

Prohibiting states from redetermining eligibility during the pandemic has exacerbated the problem. The Urban Institute estimates that if the official emergency expires as currently scheduled in July, 14.4 million Medicaid enrollees would be found ineligible and cut from the rolls.

In reality, the health emergency is already over. New Covid cases rose in May but remained low compared with other points in the pandemic and have started to decline. Hospitalizations rose but remained low, and Covid deaths continued a months-long decline. Vaccines and therapeutics are readily available, too.

Nevertheless, the Biden administration appears poised to extend the official emergency to mid-October. The Urban Institute projects that the extension will add an additional 1.4 million ineligibles to the Medicaid rolls at a cost of $36.5 billion to the federal government. A total of 15.8 million will have to be disenrolled when the official emergency ends.

Fifteen health organizations—including the American Medical Association, the American Public Health Association and AARP—have called for extending the emergency, arguing that new variants might lead to excessive hospitalizations. But this rationale could justify maintaining the emergency forever.

The public-health emergency has eased regulatory burdens, speeding access to innovative products through Food and Drug Administration emergency-use authorizations and adding flexibility for hospitals and other providers to make better use of resources. But that can and ought to be maintained by making regulatory improvements permanent, not by extending an emergency that no longer exists.

The administration and its allies voice concern that ending the emergency would jeopardize insurance coverage for millions. Yet nearly all those cut from the Medicaid rolls would be eligible for coverage through employer plans or subsidized exchange plans.

It appears as if the administration is more concerned with keeping alive a bloated welfare program than anything else. Never mind that Medicaid has been a bad deal for both patients and doctors for decades, providing small, uncertain medical benefits and poor access to care. Researchers at the Bureau of Economic Analysis, the University of Chicago and the Federal Reserve found that low payment rates and government bureaucratic barriers to obtaining payment discourage doctors from seeing Medicaid patients. Sixty-nine percent of Medicaid recipients receive care in narrow-network managed care.

Extending the public-health emergency would also add to the already unprecedented number of eligibility determinations that states have to make. States have been expressing concern for nearly a year about the backlog that grows with each extension. CMS has advised states they’ll have 14 months after the emergency ends to process ineligible recipients—but that guidance seems designed to prolong the coverage of ineligible beneficiaries rather than end it. It includes extensive procedural obstacles for removing ineligible enrollees and provides no consequence for states that fail to meet the disenrollment deadline.

Extending the public-health emergency is a Trojan horse for further government takeover of the healthcare system through a massive expansion of Medicaid to cover those who aren’t even eligible. Washington should end the emergency so states can ensure Medicaid is reserved for those who are actually eligible.

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