Iowa’s Medicaid program is in serious trouble

The center dome of the Iowa State Capitol building

Congress must act to provide additional federal funding to support increased enrollment in our state Medicaid program due to COVID-19, and this must be a priority in the next relief package. Millions have lost their jobs because of the pandemic, and 5.4 million lost health coverage as a result. That means more people are forced to look to Medicaid for coverage, adding significant strain to the program.

On Friday, July 24th, Iowa State Senator Liz Mathis, Health Policy Associate Mary Nelle Trefz, Zachary Mecham from Upgrade Medicaid, Executive Director of Iowa Citizen Action Network & Lower Drug Prices Now Iowa Sue Dinsdale, and Matt Sinovic of Progress Iowa joined a press call to call on Senator Joni Ernst and Congress to provide a higher level of federal support for Iowa’s Medicaid program, as high rates of unemployment push state Medicaid programs to the brink and states face looming budget shortfalls due to the pandemic.

What’s At Stake

Iowa’s Medicaid program is a vital lifeline for many residents.  It is THE healthcare system for hundreds of thousands of Iowans:

Impact on Iowa’s Budget

According to the National Association of State Budget Officers (NASBO), in fiscal year 2019 Medicaid was the largest expenditure for states, accounting for nearly 29 percent of total spending from all funds. The COVID pandemic has created three points of pressure on Iowa’s Medicaid program: increased utilization, increased enrollment and decreased state revenues. Iowa’s Medicaid program is now at a breaking point. 

“We’re probably going to see peaks and valleys, but mostly peaks of unemployment well into our final quarter of this year and it will extend into next year, and that will leave us without that enhanced FMAP (Federal Medical Assistance Percentages)… I think we should really put the pedal to the medal with Ernst and Grassley and say to codify this because we know that some of our most pressing issues will be happening well beyond December of this year”

Liz Mathis, Iowa State Senator 

Iowa’s Medicaid program is in serious trouble as its enrollment is projected to grow anywhere between 94,000 to 168,000 people due to the COVID-19 pandemic. And to make things worse, Iowa’s state budget faces a shortfall of $360 million in the next two years.

Impact on Iowans

Seniors, children, and people with disabilities rely on Medicaid in Iowa. Cuts in Medicaid dollars means cuts to safe staffing and quality care in nursing homes. It also means that the hundreds of thousands of children depend solely on Medicaid for their healthcare coverage are at risk. And Iowa’s most vulnerable citizens cannot be subject to the devastating loss of healthcare caused by Medicaid cuts.

According to the Centers for Medicare and Medicaid Services (CMS) there are 118 hospitals in Iowa that rely on Medicaid. Cuts to the program will force struggling rural hospitals to cut services and possibly close at a time when we need them most.

In addition, nursing homes are the epicentre of the Covid pandemic. We need to improve quality care and staffing, not cut them. There are 434 nursing homes in Iowa that depend on Medicaid for 75% of their revenue (CMS; 2020). Cuts to the Medicaid program would have devastating effects on a population that is one of the hardest hit.

Bipartisan Support

A bipartisan group of Governors, State Legislators, Mayors and County Officials join insurers, providers and advocates to urge enhanced funding for Medicaid during COVID-19 pandemic. The National Governors Association, National Conference of State Legislators, National Association of Counties, National League of Cities, The United States Conference of Mayors, The Council of State Governments joined provider groups and insurers to send a letter to Congress last week calling for enhanced federal funding for the Medicaid program in the next bipartisan COVID-19 relief bill.

Congressional Action Needed

In the Families First Coronavirus Response Act, Congress provided a 6.2 percentage point increase. The legislation specifies that funds are available to states from Jan. 1 through the quarter in which the public health emergency period ends. These groups have requested that the Administration extend the public health emergency beyond its July 25 expiration date, as state and local governments need more support to provide health care services to individuals and families.

“During the Great Recession, the increase that the federal government made in the FMAP (Federal Medical Assistance Percentages) was far greater than the increase that they have implemented so far, and our unemployment is already higher than it was during the Great Recession. So, we need increased federal Medicaid funding of at least 12 percentage points and we need to tie that increase to economic recovery.”

Mary Nelle Trefz, Health Policy Associate, Child & Family Policy Center

Congress must act. Senator Joni Ernst must act. Call Senator Ernst: (202) 224-3254>

The Senate’s current HEALS bill is not robust enough to support the Medicaid needs due to COVID. Iowa’s Medicaid program, along with our state budget, is already stretched to the limit and is about to break unless the federal government does its part and provides more funding for this critical program and other essential services. If our hospitals don’t survive, our patients don’t. Medicaid funding is essential for us to battle this crisis. We need Senator Ernst to act and enhance federal funding for Medicaid.

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