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State social services workers signed up homeless residents for Medicaid at a resource fair in Richmond in early November. 

Courtesy of Virginia Mercury

Virginia’s Medicaid enrollment has increased by 55,000 more people than anticipated since a March 12 declaration of emergency at the start of the COVID-19 pandemic. The rapid climb in enrollment numbers comes with questions about how the state will shoulder the costs if federal aid ends before Virginia’s economy fully recovers from the weight of the crisis.

Participation in the program typically rises during periods of recession, according to state Finance Secretary Aubrey Layne. But experts say the surge over the last three and a half months is different, driven not just by the global pandemic and accompanying economic downturn, but by the state’s recent Medicaid expansion, which allows more residents to take advantage of the medical safety net.

“It’s even more of a reason to celebrate — that we’re able to protect more people during this pandemic,” said Karen Kimsey, director of the Virginia Department of Medical Assistance Services, which administers the state’s Medicaid program. “For people to have that security in knowing that if they need care, it’s there for them.”

The current surge is even more significant compared to the last major recession in 2008. From the start of the downturn in December 2007 to its official end in June 2009, 63,735 Virginians enrolled in the program — a significant increase compared to the previous 18-month period, which saw enrollment drop by a little more than 3,000 people. 

Since the March 12 state of emergency, a total of 92,000 residents have enrolled in Medicaid, Kimsey said — the equivalent of roughly 900 new members a day. One in six Virginians now are enrolled in the program. Some of that growth was expected based on overall increases since eligibility was expanded, in January 2019, to include all adults aged 19 to 64 below a certain income bracket.

But Kimsey said Medicaid expansion likely fueled the current recession-based surge. Hundreds of thousands of Virginians have filed for unemployment since the beginning of the coronavirus pandemic. In 2008, only some of those residents would have been able to regain health insurance through the program, which was previously limited by what she described as both “categorical and financial” requirements,

“You had to meet the financing requirements,” she said — an income below 138 percent of the federal poverty line. “And at the same time, you had to meet one of the categories of eligibility, which meant you had to be a pregnant woman or you had to be a child or you had to be a senior or a person with a disability.”

Under expansion, any Virginian with an income up to 138 percent of the federal poverty level is now eligible for Medicaid. It’s led to greater enrollment in general, Kimsey added, but even more so during the current recession as thousands are losing job-based health insurance.

DMAS is currently working to separate demographic information for new enrollees to determine how much of the increase is directly related to COVID-19 versus overall expansion-based growth. Determining the impact of the pandemic on Medicaid spending is also a complicated proposition, according to Joe Flores, one of the state’s deputy secretaries of finance.

Since general Medicaid enrollment has been trending upward over the last 30 years — and even more so since the state expanded the program — officials are still waiting to learn how much of the current growth can be attributed to COVID-19. It’s also not clear how long any pandemic-related surge will last before enrollment levels off. 

Then there are the conflating financial factors. DMAS has taken additional measures to protect residents since March, such as expanding telehealth, eliminating out-of-pocket costs for Medicaid members, and increasing the reimbursement rate for nursing homes. But for much of the same period, there was a temporary moratorium on elective procedures and a general decline in medical services during the state’s stay-at-home order.

‘The duration is a huge unknown’

Increased reimbursements to nursing homes, for example, were funded with money that would have ordinarily gone to refund providers for other medical services. Flores said the volume of visits still hasn’t returned to normal levels, and it’s unclear when services will fully resume.

“There’s a lot of noise in the numbers,” he added. Some of the increased costs have also been reimbursed by the federal government, which increased its matching funds for Medicaid costs by 6.2 percent in the first coronavirus stimulus bill.

That aid is one of the biggest unknowns moving forward, Flores said. During the 2008 recession, the federal government approved 27 months of higher matching funds for Medicaid. But the current increase only extends through the fiscal quarter in which the national state of emergency ends. There’s currently no official end date for the federal declaration, but it could be a serious financial imposition for Virginia if the increased funds end before the state sees full financial recovery and a normalization in enrollment. 

“I’d venture to guess that if you were to compare the depths of this recession to the one 10 years ago, this is going to be much more severe,” Flores said. “So, the duration is a huge unknown, because once COVID ends it doesn’t mean everybody is going to go back and get their jobs.”

Any potential Medicaid spending increases — and the full impact of the pandemic on Virginia’s general fund revenues — are still unclear. Legislators passed a modified version of the biennium budget in April, but Gov. Ralph Northam has indicated he plans to reconvene the General Assembly in August for another look at the state’s spending plan. 

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