Covid-19 Vaccination Costs to Strain State Medicaid Programs

Aug. 20, 2020, 9:45 AM

Getting millions of Covid-19 vaccine doses to the poorest adults in the country will require budget-conscious Medicaid plans to get creative with dwindling resources and a patchy health-care system not designed for mass inoculation.

Congress boosted funds to states and patched holes in vaccination coverage for some low-income adults during the pandemic. But the extra funding expires when the public health emergency ends, and some Medicaid analysts worry that without more, states will have to cut budgets for other health programs to ensure they can afford to distribute a virus vaccine.

Efficient distribution of a Covid-19 vaccine is an essential part of slowing the spread of the virus throughout the U.S. Inoculation for adults through Medicaid is especially important because low-income Americans are more likely to get the virus than wealthier workers who have health insurance through their employer.

That’s partly because lower-income workers often don’t have jobs that offer the flexibility to work from home, or they don’t have enough savings to leave a job that’s unsafe, according to the Centers for Disease Control and Prevention.

Although Medicaid costs haven’t risen sharply enough yet to strain state budgets, most analysts expect that to happen before long, said Dan Meuse, deputy director of the State Health & Value Strategies program at Princeton University.

It’s a classic example of a “counter-cyclical” program, where enrollment and costs increase at the same time that state revenues decline, he said.

Medicaid is a joint federal-state health program that primarily serves low-income families, the elderly, and people with disabilities.

Finite Funding Creates Anxiety

States got a 6.2% bump in federal assistance through the Families First Coronavirus Response Act that Congress passed in March. State plans have to cover Covid-19 vaccines as part of the condition to get the extra money, which means anyone on Medicaid should be able to get vaccinated.

But analysts say that increase probably won’t be enough for Medicaid plans to cover a new swath of people expected to sign up as their income level drops and the economic fallout of the pandemic continues. Plans also need to ensure vaccine reimbursement rates are high enough to induce providers to administer it.

“The idea behind the Medicaid increase in March was to help shore up those programs, but the size of the increase was smaller than the increase enacted after the Great Recession,” Edwin Park, a policy research professor at Georgetown University, said.

While the funding increase assures vaccine coverage, it also limits states’ abilities to find savings in their Medicaid program.

The Families First Act prevents states from tightening eligibility rules or terminating members during the public health emergency. But policy makers looking to save money could still opt to reduce payments to health-care providers or cut optional Medicaid benefits.

States may be reluctant to trim too much from providers who have been hit hard by the Covid-19 crisis, but that didn’t prevent Nevada from eliminating a planned increase in reimbursement rates, Meuse said. Tennessee also recently decided to scuttle a plan to expand postpartum coverage for new mothers as a way to cut overall costs.

Other similar policy changes are almost certain to come unless Congress allocates more relief funds to Medicaid programs and the states, he said.

Legislation (H.R. 6800) passed by the House in May would further boost funding for states to pay for vaccines and treatments to lessen financial burdens and ensure sufficient access for beneficiaries, Park said.

The measure, known as the Heroes Act, is under Senate consideration, but Democrats and Republicans are having a hard time compromising on the next Covid-19 relief package.

If a state doesn’t qualify for the 6.2% bump or the public health emergency ends, states “will provide vaccine coverage as dictated by their individual Medicaid state plan,” the Centers for Medicare & Medicaid Services said.

A Leaky System

Job and wage cuts related to the coronavirus hit low-income workers harder than middle or higher income adults, according to research from the Pew Research Center. Lower-income workers also face a historically leaky health-care system because low paying jobs are less likely to offer health benefits.

Medicaid was set up primarily to ensure poor kids and other vulnerable populations had health care. Low-income children have generally been able to receive vaccinations at no cost under the federal Vaccines for Children Program. Until 2010, state Medicaid programs weren’t required to provide vaccination coverage for adults.

The situation for adults changed with the passage of the Affordable Care Act, which allowed states to expand Medicaid eligibility to include adults with incomes up to 138% of the federal poverty level. The law also required expansion states—38 so far—to cover vaccinations for the new population with no cost sharing.

Adults already on Medicaid weren’t guaranteed vaccine coverage, however.

Just 22 of 51 Medicaid programs covered all adult immunizations recommended by the CDC, according to a recent study in the Journal of the American Medical Association. Of those programs, only 14 provided vaccination benefits without copayments, the study found.

The lack of full vaccination coverage is “likely associated with fewer Medicaid beneficiaries receiving the recommended vaccines,” it said. Reimbursements for vaccine purchase and administration is lower in Medicaid than in other public and private programs, which also could lead to lower vaccination rates, according to the study.

Overall, states will likely look for ways to cut costs to ensure adequate vaccine distribution, and social safety net programs like Medicaid are typically a large chunk of state budgets, Park said. States will be pressured to cut parts of that program, even though more people will “need to turn to Medicaid because their incomes have fallen,” he said.

To contact the reporters on this story: Jacquie Lee in Washington at jlee1@bloomberglaw.com; Christopher Brown in St. Louis at ChrisBrown@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Alexis Kramer at akramer@bloomberglaw.com

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