Reforming Medicaid Reimbursement before the Next Pandemic

On March 18, Congress enacted the Families First Coronavirus Response Act, the first economic relief bill in response to the pandemic. It mandates that state Medicaid programs cover diagnosis and testing for COVID-19 at no cost to beneficiaries and includes a temporary, conditional 6.2 percentage point increase in federal Medicaid reimbursement rates. This bill is an appropriate response to emergency conditions, during which delivering these necessary health services is the highest priority, while also providing states with desperately needed financial relief.The effectiveness of this temporary reimbursement increase is, however, less than it could or should be, in large part because federal reimbursement rates were already inflated and distorted before the crisis as a result of provisions of the Affordable Care Act (ACA). These provisions have increased the cost of caring for individuals on Medicaid, especially in states that expanded Medicaid coverage to individuals who were ineligible for the program before enactment of the ACA. Before the next crisis hits, the federal Medicaid reimbursement structure needs to be rationalized