FMAP Needs Long-term Bolstering, Say AAFP, Other Groups

States Facing Budget Shortfalls Must Be Backstopped for Medicaid Enrollment Surge

July 16, 2020 12:52 pm News Staff

With the U.S. unemployment rate hovering above 11%, the next congressional COVID-19 relief package must increase Medicaid's federal medical assistance percentage -- ensuring Americans' access to health care during and beyond the public health emergency -- said the AAFP and dozens of organizations in a July 10 letter(4 page PDF) to lawmakers.

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An enhanced FMAP, which would increase the amount of matching Medicaid funds the federal government gives states for certain medical and social services, could play a key role in the country's recovery and help offset budget gaps due to decreased state revenues, the letter said.

Among the more than 100 state and national health care and public policy groups signing the letter were the AMA, the American Academy of Pediatrics and the National Conference of State Legislatures. It was sent to House Speaker Nancy Pelosi, D-Calif., and Minority Leader Kevin McCarthy, R-Calif., as well as to Senate Majority Leader Mitch McConnell, R-Ky. and Minority Leader Charles Schumer, D-N.Y.

The 6.2% FMAP increase in the Families First Coronavirus Response Act(5 page PDF) was welcome, the groups wrote, but an additional boost of at least 5.8% -- retroactive to Jan. 1, 2020 -- is now needed and should remain in place until Sept. 30, 2021, regardless of unemployment conditions.

"After September 30, 2021, the 12% FMAP increase should not be reduced until the national unemployment rate falls below 5%," the letter said; additional FMAP increases should be determined "based on the increase in a state’s unemployment rate."

The groups also called for Congress to rescind the administration's proposed Medicaid Fiscal Accountability Rule,(www.kff.org) arguing that, if implemented, it would "reduce the ability of states and localities to finance the nonfederal share of Medicaid, resulting in a reduction in federal Medicaid funding for the public health and hospital systems and destabilizing them at a time when health care and public health services are needed most."

The July 10 letter's FMAP position echoes recent advice the Academy offered HHS on U.S. health system resilience: "It is critical that the FMAP be altered and tied to economic indicators," said the AAFP.

"While Medicaid spending can adjust in response to fluctuations in economic activity, the current formula for sharing Medicaid expenditures between states and the federal government does not allow for a rapid increase in federal contributions when state economic conditions decline," that July 8 letter stated,(3 page PDF) "nor does it provide a mechanism for additional federal contributions to stimulate growth during a national recession."

Citing National Association of State Budget Officers data, the letter reminded congressional leaders that Medicaid was the largest expenditure for states last year. Now, it added, the pandemic is expected to cause most states "a budget shortfall ranging between 5% and 20%" -- making the need for federal assistance more urgent.

The July 10 letter pointed to recent history to bolster the groups' case.

"The Government Accountability Office reported that during the Great Recession, the unemployment rate grew from 5% to 9.5%, while Medicaid enrollment rose by 9.7% -- adding nearly 4.3 million enrollees to the program," the groups wrote. "There is ample precedent for Congress acting during economic downturns to temporarily increase the FMAP, including increasing the FMAP by nearly 12% a decade ago."

Related AAFP News Coverage
Academy Urges Congress to Extend Medicaid Payment Increase
Federal Medical Assistance Percentage Must Rise to Meet COVID-19 Challenge, Groups Say

(6/4/2020)

Big Medicaid Boost Is Next Priority, AAFP Tells Congress
Deepening State Crisis Looms as Federal Matching Funds Come Up Short

(4/22/2020)