Congress Needs A Smart, Targeted, Flexible Approach To Fighting Virus Outbreak

The House of Representatives is expected to vote today on emergency legislation to help states fund their coronavirus response efforts, but the bill takes a simplistic, inequitable and mistargeted approach, according to Galen Senior Fellow Brian Blase.

In their efforts to help states combat the virus and the resulting economic impact, “House Democrats advocate sending enormous sums to states — even those with without any connection to the outbreak — sans any requirement that they be spent on addressing the problem,” he writes today in National Review Online. The bill released yesterday would simply boost federal Medicaid funding for each state by 8%.

“It’s common sense that funds should be targeted to where the outbreak is most severe, yet the bill…would send tens of billions of dollars disproportionately to states that are richer and have lower uninsured rates, not those hardest hit by the virus attack.”

He explains that Washington state, for example, “which has 2 million more people than Minnesota, would receive $100 million less even though, as of March 12, there are 366 reported coronavirus cases in Washington and fewer than five in Minnesota.”

There are better solutions, Blase argues. “Congress should provide funds to help, but it should do so separate from existing state Medicaid expenditures, which would reward states with larger and higher-spending programs. Moreover, we should be sending more federal funds to poorer states and those with more uninsured—precisely the opposite of what House Democrats are proposing.” 

Funding should be flexible, allowing discretion to determine where it is most needed, especially states hardest hit by the outbreak, he writes. 

“Congress could also approve federal funding to replace the lost income of those who need to self-quarantine but lack flexible work arrangements. These approaches are targeted to the problem, would improve public health, and would not merely spray federal money to states, without regard to the impact of the virus on their communities.”  

The House bill has some good provisions that should be retained, he writes, including providing funds to allow uninsured people to get free tests for the coronavirus to assure that no one fails to get tested for financial reasons. 

Here is a link to Blase’s chart that shows how much each state would receive in extra funds if the House proposal for an 8% across-the-board Medicaid increase were to be enacted, what percentage increase it would be for each, their respective uninsured population, and the additional federal funds per uninsured. 

It clearly shows the House bill favors states that have much larger and profligate Medicaid programs. Massachusetts will receive $350 million more than New Jersey despite New Jersey having two million more residents and 470,000 more uninsured.

(Reports suggest the House is considering reducing the Medicaid boost from 8% to 6.2%, but this doesn’t change the underlying analysis or distribution of funds among states. It just lowers the amount per state by the same 22.5% percentage.)

The chart makes it clear that House Democrats’ across-the-board Medicaid FMAP increase is a misguided use of resources to respond to this public health emergency. It’s up to the Senate and the White House to craft a more targeted, effective proposal.