Medicaid Costs, Enrollment Surge During Pandemic
State economists say a $342 million current-year surplus will turn into a nearly $1.25 billion shortfall in the 2021-22 fiscal year, “primarily caused by the end of the supplementary federal funding.”
A new forecast for Medicaid shows state economists and health officials continue to predict a jump in the number of people enrolling in the coming year - bringing a dramatic surge in the amount of money needed for the safety-net program.
In a report posted online Monday, economists projected that Medicaid costs in the current fiscal year, which started July 1, will total $31.6 billion, which is about 19 percent higher than during the 2019-20 fiscal year. The COVID-19 pandemic, which has played a major role in increased enrollment, hit the state several months into the 2019-20 fiscal year.
Despite the tremendous increase in enrollment and costs, the economists say Medicaid will have a $342.8 million surplus in general revenue funds this fiscal year. The projected surplus is a result of Congress’ decision to increase the federal government’s share of money this year for Medicaid, which is jointly funded by states and Washington.
Congress this spring approved a 6.2 percentage-point increase in what is known as the Federal Medical Assistance Percentage, or FMAP, a move that effectively drives up the amount of federal money going into the program and eases the burden on states.
But the $342 million current-year surplus, state economists agreed, will turn into a nearly $1.25 billion shortfall in the 2021-22 fiscal year, “primarily caused by the end of the supplementary federal funding,” according to an executive summary of the report. That projected deficit will confront state lawmakers when they begin the annual legislative session in March and work on a budget for the 2021-22 year.
The increased costs are driven primarily by a surge in enrollment as the COVID-19 pandemic has caused widespread job losses and new demands on the health care system.
Florida’s Medicaid enrollment was around 3.9 million people before the pandemic. Economists, who meet as the state’s Social Services Estimating Conference, predicted enrollment of more than 4.44 million people this fiscal year, before the ranks swell to 4.588 million in 2021-22 and then begin to subside in later years.
“As a result of the uncertainty arising from the future course of the COVID-19 pandemic and its differential effects on the economy, the conference increased total caseload in FY 2020-21 to 4,442,013 - well above the prior peak of 4,017,726 seen in FY 2016-17,” the report’s executive summary said. “Caseload then remains higher than the old peak throughout the forecast, despite its expected decline in the outer years as the unemployment rate improves.”
With Medicaid providing health coverage to poor, elderly and disabled people, enrollment is countercyclical, increasing in tough economic times and decreasing when the economy is thriving. Because Medicaid enrollment increases come during recessions when there is less tax revenue to pay for the program, it puts strains on state budgets.
With the pandemic cutting deeply into state tax collections, legislative leaders already are warning they will have to make budget cuts. The state’s Revenue Estimating Conference is scheduled to meet Friday to update overall general-revenue projections, which will be used in making budget decisions.