How Would the Families First Coronavirus Response Act Help States Protect People and Public Health 

Last week, the Families First Coronavirus Response Act became law (P.L. 116-127).  It took effect on the same day as it was signed (March 18).  That day came just one week after it was introduced in the House of Representatives.  In the parlance of Capitol Hill, when a bill spans numerous programs and multiple committee jurisdictions, one week from start to finish is referred to as warp-speed.

Of course, there is some logic to this urgency:  the COVID-19 pandemic is throwing the U.S. economy into recession and threatens to overwhelm our health care system.  Under the circumstances, there’s no time to design something new; you go with what you’ve got.  And fortunately, despite the best efforts of the CMS Administrator, we have Medicaid and CHIP.  Those, along with Medicare, are the health insurance programs that the Families First Act turns to in order to make testing for the coronavirus financially accessible for millions of Americans.

As we explain in some detail, the Act contains three new Medicaid and CHIP policies:  (1) a temporary increase in the federal Medicaid matching rate (FMAP) by 6.2 percentage points for all states and the territories; (2) a requirement that states cover COVID-19 testing in Medicaid and CHIP without cost-sharing; and (3) a new option for states to extend Medicaid coverage for testing to uninsured individuals at federal expense.  All three of these changes took effect last week and extend through the COVID-19 public health emergency period declared by the Secretary of Health and Human Services.

For children and families, the most important of the three is the 6.2 percentage point FMAP increase, for two reasons:

First, as our colleague Edwin Park has explained, the Medicaid matching rate is a critical policy lever for the federal government to help blunt the effects of a recession on states and on the national economy.   The 6.2 percentage point increase is retroactive to January 1, 2020, meaning that states get fiscal relief immediately for all of the Medicaid expenses they incur throughout this calendar quarter, not just after March 18.  (The reduction in state share ranges from 12 percent in states with a 50 percent FMAP to 27 percent in the state with the highest FMAP (77 percent)).

Second, the 6.2 percentage point increase is available to a state only if it maintains effort in four critical areas. States cannot (1) implement any eligibility standards, methodologies, or procedures that are more restrictive than those in effect on January 1, 2020; (2) impose new or increased premiums on beneficiaries that exceed the amount in effect as of January 1, 2020; (3) disenroll anyone who is enrolled as of March 18 or who newly enrolls during the public health emergency period for any reason (unless the individual no longer resides in the state or voluntarily disenrolls); and (4) fail to cover, without cost-sharing, testing services and treatment for COVID-19.  Taken together, these prohibitions will protect beneficiaries from disenrollment as a result of red-tape “flexibilities” that CMS Administrator Verma has been pushing such as work requirements, monthly premiums, periodic income testing, redeterminations more frequently than once every 12 months, etc.

The Families First Act is absolutely essential but not sufficient.  As economists at the Brookings Institution have shown, a 6.2 percentage point FMAP increase is not adequate to respond to what is likely to be a sharp increase in unemployment.  In addition, the option for states to cover the costs of COVID-19 testing for the uninsured with 100 percent FMAP does not extend to the costs of treatment.  As conservative health policy analysts have recognized, coronavirus does not discriminate between the insured and the uninsured, and Medicaid is best positioned to provide coverage to the uninsured

Finally, while the Act prevents states that take the 6.2 percentage point FMAP increase from disenrolling low-income beneficiaries during the public health emergency, it does not stop the CMS Administrator from continuing her efforts to issue regulations that would gut the ability of many states to pay for their share of Medicaid.  COVID-19 is creating enough revenue challenges for states and their public health infrastructures; neither they nor the economy needs further structural damage.

The Congress and White House are now in the midst of negotiating another legislative response to the COVID-19 pandemic.  This legislation would give them an opportunity to strengthen the Medicaid and CHIP provisions included in the Families First Act.  Here’s hoping they seize it.

Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.