Better-than-expected tax revenues and a tsunami of federal aid have helped states bolster Medicaid and safety net programs during the pandemic.
When the coronavirus public health emergency was declared in early 2020, public health experts feared that Medicaid and safety net programs would get pummeled.
They anticipated a huge increase in demand for public assistance colliding with an anticipated drop in state tax revenues and slashed budgets owing to the pandemic-driven recession.
That didn't happen.
"The circumstances were not as dire from a budget perspective," said Stacey Mazer, senior staff associate with the National Association of State Budget Officers, during a recent virtual round table sponsored by the Urban Institute.
"We saw the additional federal aid packages, the fact that higher-income people could work at home and pay taxes, and online sales," Mazer said. "For all those reasons, as the year progressed, the feeling was that 'huh, this is not that bad.'"
"Not that there wasn't revenue lost and extremely expensive costs and complexities to delivering services," she said. "But that was the biggest surprise from a year ago when it looked like it was going to be a crater."
Two new reports this week by the Robert Wood Johnson Foundation found that states used better-than-expected tax revenues, and an infusion of federal aid and regulatory flexibility to increase key safety net programs such as food assistance, emergency rental assistance, moratoria on evictions and utility shut offs, direct payments to Medicaid providers, and expanded access to telehealth.
"States are now in a position to equitably and efficiently spend the large and temporary influx of federal relief funds," the studies concluded, adding that the challenge now is to determine what policy investments and innovations worked best and which to carry forward to best address racial and ethnic disparities and economic inequality that was exacerbated by the pandemic.
There are hopes that the pandemic will provide policymakers with a base from which to redesign safety net programs that are more nimble, holistic, and equitable, and which focus on prevention and preparation for the next public health emergency.
"One thing the pandemic taught us is that Medicaid, which is a $600 billion program covering one-in-five Americans, can move really quickly," said Matt Salo, executive director of the National Association of Medicaid Directors, during the Urban Institute roundtable.
"You can get things done quickly when the rules don't matter, but at some point, the rules are going to matter again, and things are going to slow down again, and the auditors are going to come in again, and we're going to have to take a breath, but we can do it," Salo said.
“One thing the pandemic taught us is that Medicaid, which is a $600 billion program covering one-in-five Americans, can move really quickly.”
Matt Salo, executive director, National Association of Medicaid Directors
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
KEY TAKEAWAYS
Health policy wonks anticipated a huge increase in demand for public assistance colliding with an anticipated drop in state tax revenues and slashed budgets owing to the pandemic-driven recession.
States used better-than-expected tax revenues and an infusion of federal aid and regulatory flexibility to fund Medicaid and increase safety net programs such as food assistance and rental assistance.
There are hopes that the pandemic will provide policymakers with a base from which to redesign safety net programs that are more nimble, holistic, and equitable, with a focus on prevention.