ISSUE BRIEF DECEMBER 2020 Jeopardizing a Sound Investment: Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm Edwin Park Joan Alker Alexandra Corcoran Research Professor Executive Director/Research Professor Research Associate Center for Children and Families Center for Children and Families Center for Children and Families McCourt School of Public Policy McCourt School of Public Policy McCourt School of Public Policy Georgetown University Georgetown University Georgetown University ABSTRACT TOPLINES ISSUE: States are facing large revenue shortfalls and budget deficits from Medicaid coverage of children the COVID-19 crisis. To close deficits, they will need to raise taxes, cut and their pregnant mothers helps improve children’s health spending to critical public programs like Medicaid, or both. outcomes well into adulthood. GOALS: Examine the long-term benefits of Medicaid coverage of children and pregnant women, and the likely impact of state Medicaid cuts for Research shows government the short and long term. funding of Medicaid has a strong return on investment. METHODS: Review of research literature on the long-term benefits of Medicaid coverage of children and pregnant women. KEY FINDINGS: Research shows Medicaid coverage of children and pregnant women is associated with improved health and lower rates of disability in adulthood. Medicaid coverage is also associated with higher educational attainment and greater financial security. Some studies find that Black children particularly benefit. Medicaid also produces financial benefits for society and a strong return on government investment. CONCLUSIONS: Because state and federal policymakers tend to focus more on short-term budget windows, they do not always consider long-term consequences. In addition to further temporary boosts in federal Medicaid funding, one potential policy solution is an automatic federal funding increase to avert Medicaid budget cuts during future economic downturns. Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm2 INTRODUCTION less educational attainment are key contributors to the Medicaid covers nearly 39 percent of children nationwide.1 significant health disparities experienced by communities A growing and robust body of research finds that of color. Although the majority of children enrolled in Medicaid coverage of children, and of their mothers Medicaid are white, Black, Latino, and American Indian/ during pregnancy, is associated with many long-term Alaska Native children disproportionately receive health benefits in adulthood. These include better health, coverage through Medicaid.4 As a result, Medicaid cuts reduced disability, greater educational attainment, and could particularly harm communities of color, in both the better financial outcomes, with some studies finding short and long term. particular benefits for Black children. Although the immediate benefits of Medicaid coverage — including KEY FINDINGS increased access to care for children and greater financial Studies of Medicaid coverage of children and pregnant security for families — are well accepted, the long-term women generally use a similar methodology: they examine benefits are not as widely known.2 differences in outcomes for distinct age cohorts born before As nearly all states are required to balance their budgets, and after Medicaid expansions for children and pregnant state policymakers will likely consider cutting their women were implemented. For example, mandatory Medicaid programs to address the large revenue shortfalls increases in Medicaid minimum income eligibility levels for and budget deficits resulting from the COVID-19 public children and pregnant women were phased in during the health and economic crisis. Such financial challenges 1980s and 1990s, and more expansions occurred in the late could extend beyond this year for several years to come. 1990s and early 2000s after the Children’s Health Insurance Because Medicaid is a federal–state financial partnership, Program (CHIP) was implemented. the federal government picks up a fixed share of states’ Medicaid costs. This means that when states cut Medicaid Because states took up these expansions at different times to reduce their spending, they lose federal matching funds and to a different extent, researchers are able to examine as well, creating a “multiplier” effect resulting in larger how children’s outcomes were affected by this variation. total Medicaid cuts that could deepen and prolong the The following are some of the key findings. recession. Medicaid is the largest source of federal funding in state budgets, so this effect is substantial. Medicaid and Better Health in Adulthood Medicaid cuts affecting children and pregnant women Medicaid coverage of children and pregnant women is also could produce long-term harm by leading to poorer linked to fewer chronic conditions, better overall health, health and economic outcomes for low-income children improved oral health, and fewer hospitalizations and later in life. It is well documented that both higher income emergency room visits in adulthood. Most importantly, and greater educational attainment are linked to better Medicaid is associated with lower mortality and longer health, including reduced mortality and incidence of lives. It also may produce better outcomes in the next disease.3 Along with systemic racism, lower incomes and generation of children. Medicaid’s Long-Term Impact Better overall on Health health and reduced mortality Improved oral health Fewer chronic conditions Fewer hospitalizations Fewer ER visits commonwealthfund.org Issue Brief, December 2020 Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm3 Better health. Medicaid coverage in early life is associated in hospitalizations, particularly related to diabetes and with a decreased incidence of chronic conditions as obesity, in adults ages 19–36.9 More years of childhood measured by an index of conditions (obesity, diabetes, eligibility for Black children also is linked to decreased heart disease or heart attack, and high blood pressure) in hospitalizations at age 25. More years of Medicaid coverage adults ages 19–36.5 Eligibility for Medicaid for low-income also were associated with fewer emergency room visits, children also is linked to improved health in adulthood particularly visits related to chronic illnesses and visits for (ages 25–54), as measured by a composite health index those living in low-income zip codes (Exhibit 1).10 (high blood pressure, diabetes, heart disease/heart attack, and obesity).6 Lower mortality rates. Each additional year of Medicaid childhood eligibility is associated with a decline in An additional year of Medicaid eligibility in childhood mortality rates among young adults.11 A year of childhood was associated with improvement in an index of eligibility also was linked to reduced cumulative mortality conditions (ability to attend school, self-reported health (unrelated to HIV/AIDS) in adulthood.12 Years of Medicaid status, chronic conditions, and asthma) among young eligibility in childhood lowered mortality rates (from adults ages 18–20.7 Medicaid coverage of pregnant women internal causes such as cancer, nervous system diseases, and and infants in the first year of life was linked to better infectious diseases) among Black adolescents and young oral health (as measured by loss of permanent teeth) in adults (ages 15–23).13 Age cohorts born after Medicaid non-Hispanic Black adults ages 19–31.8 was established had lower mortality rates throughout Fewer hospitalizations and emergency room visits. childhood and into adulthood, with the strongest Medicaid Exhibit 1 in early childhood is associated with a reduction association in the oldest age group studied (ages 36–40).14 Effect of Medicaid Child Expansions on Health Care Utilization by Black Young Adults at Age 25 Exhibit 1. Effect of Medicaid Child Expansions on Health Care Utilization by Black Young Adults at Age 25 Upper-range estimate Lower-range estimate -2% -5% -7% -15% Number of hospitalizations Emergency room visits Data: Laura R. Wherry et al., “Childhood Medicaid Coverage and Later-Life Health Care Utilization,” Review of Economics and Statistics 100, no. 2 (May 2018): Data: Laura R. Wherry et al., “Childhood Medicaid Coverage and Later-Life Health Care Utilization,” Review of Economics and Statistics 100, no. 2 (May 2018): 287–302. 287–302. Source: Edwin Park, Joan Alker, and Alexandra Corcoran, Jeopardizing a Sound Investment: Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm (Commonwealth Fund, Dec. 2020). commonwealthfund.org Issue Brief, December 2020 Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm4 Healthier birth weight in next generation of children. lower application rates for Social Security Disability Medicaid coverage of pregnant women was associated Insurance (SSDI) among adults ages 25–64.17 Medicaid with higher, healthier birth weight for their children. eligibility throughout childhood also reduced In combination with childhood Medicaid eligibility, Supplemental Security Income (SSI) applications Medicaid also was associated with higher, healthier birth among young adults (ages 20–28).18 weight for the following generation of children as well.15 Medicaid and Higher Educational Attainment Medicaid and Lower Incidence of Disability in Medicaid coverage of children, and of their mothers Adulthood during pregnancy, was associated with increased rates of Children who were eligible for Medicaid were less likely high school graduation, on-time high school graduation, to report having disabilities and to apply for disability college enrollment, and four-year college graduation. benefits as adults. Higher high school graduation rates. Medicaid eligibility • Less self-reported disability. Adults under age 65 for pregnant women and children was associated with reported fewer challenges with activities of daily a greater likelihood of children graduating from high school.19 Children’s eligibility for Medicaid and CHIP living, including ambulatory difficulty, if they were was linked to a decrease in the high school dropout rate, likely eligible for Medicaid in early childhood.16 particularly among children of color.20 It also increased • Reduced need for disability benefits. Early childhood the probability of completing high school on time in four Medicaid coverage (under age 12) was associated with years, especially for Latino and white children (Exhibit 2).21 Exhibit 2 Effect of 10-Percentage-Point Increase in Childhood Medicaid Eligibility on Exhibit 2. Effect of 10-Percentage-Point Increase in Childhood Medicaid Eligibility on High School High School Graduation Graduation High school dropout rate On-time four-year high school completion 1.6% 0.9% -2.5% -3.9% Upper-range estimate Lower-range estimate Data: Lincoln H. Groves, “Still ‘Saving Babies’? The Impact of Child Medicaid Expansions on High School Completion Rates,” Contemporary Economic Policy 38, no. 1 (Jan. 2020): 109–26. Data: Lincoln H. Groves, “Still ‘Saving Babies’? The Impact of Child Medicaid Expansions on High School Completion Rates,” Contemporary Economic Policy 38, no. 1 (Jan. 2020): 109–26. commonwealthfund.org Issue Brief, December 2020 Source: Edwin Park, Joan Alker, and Alexandra Corcoran, Jeopardizing a Sound Investment: Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm (Commonwealth Fund, Dec. 2020). Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm5 Higher college enrollment and graduation rates. Medicaid eligibility in childhood was associated with an increase in college enrollment rates among Medicaid’s Long-Term young adults, with larger effects for children with more years of Medicaid Impact on Educational eligibility.22 It also increased the likelihood of obtaining a four-year college Attainment degree, especially among white children.23 Medicaid and Greater Financial Security in Adulthood Medicaid coverage of children and pregnant women produces considerable financial benefits for both individuals and society at large. It raises both children’s earnings in adulthood and improves intergenerational mobility, On-time which, in turn, increase tax payments that help offset the earlier investment in High school high school graduation graduation health coverage. Higher earnings and higher total tax payments. Women with more years of childhood Medicaid eligibility had higher wage income as young adults, especially for those who remained eligible through the teenage years (Exhibit 3).24 Each additional year of childhood Medicaid eligibility was associated with an increase in total federal tax payments made in adulthood. Higher income taxes and payroll taxes paid (because of higher earnings) constituted Four-year College college the large majority of the increase, with reduced reliance on the Earned Income enrollment graduation Tax Credit (EITC) also a factor. The share of these higher total tax payments Exhibit 3 (because of higher income taxes on higher earnings) grew with age.25 Increased Income and Total Tax Payments for Each Additional Year of Childhood Medicaid Eligibility by Age 28 Exhibit 3. Increased Income and Total Tax Payments for Each Additional Year of Childhood Medicaid Eligibility by Age 28 $1,784 $533 Wage income for women Total tax payments Data: David W. Brown, Amanda E. Kowalski, and Ithai Z. Lurie, “Long-Term Impacts of Childhood Medicaid Expansions on Outcomes in Adulthood,” Review of Economic Data: Studies David W. Brown, 87, no. Amanda 2 (Mar.and E. Kowalski, 2020): Ithai Z.792–821. Lurie, “Long-Term Impacts of Childhood Medicaid Expansions on Outcomes in Adulthood,” Review of Economic Studies 87, no. 2 (Mar. 2020): 792–821. commonwealthfund.org Issue Brief, December 2020 Source: Edwin Park, Joan Alker, and Alexandra Corcoran, Jeopardizing a Sound Investment: Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm (Commonwealth Fund, Dec. 2020). Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm6 Greater intergenerational mobility. Medicaid coverage during pregnancy and in the first year of life was linked to “FAMILIES FIRST” RESTRICTIONS ON increased economic mobility, as measured by a reduction MEDICAID CUTS in the correlation between income percentile rankings The Families First COVID-19 legislation (P.L. of low-income parents and their children in adulthood. 116–127) includes a maintenance-of-effort Specifically, increased Medicaid eligibility for those with requirement that prohibits states from cutting incomes in the 10th percentile was associated with a Medicaid eligibility and benefits, imposing stricter greater likelihood of being in a higher income percentile eligibility procedures, or disenrolling beneficiaries later in life.26 involuntarily for the duration of the public Strong rate of return on government investment. More health emergency as a condition of a temporary than half of the cost of Medicaid coverage in childhood 6.2 percent increase in the federal Medicaid matching rate (also known as the Federal Medical was offset by higher tax receipts in adulthood.27 The cost Assistance Percentage, or FMAP). Under separate of coverage also was partially offset by reductions in federal law (P.L. 115–120 and P.L. 115–123), states disability benefit payments.28 Lower total costs related are prohibited from cutting eligibility for children to reduced hospitalizations in adulthood also may offset in families with incomes below 300 percent of the a portion of the cost of Medicaid coverage.29 Medicaid federal poverty level or imposing more restrictive coverage of children and pregnant women also had a high eligibility procedures under both Medicaid or marginal value of public funds — a measure of how much CHIP through September 30, 2027. in “welfare” can be delivered to beneficiaries for every dollar of net government spending.30 In fact, the same States, however, may still cut Medicaid in other ways during the public health emergency. study found that Medicaid coverage may have fully paid For example, they could reduce Medicaid for itself by the time eligible children reached age 36.31 reimbursement rates to hospitals, physicians, dentists, nursing homes, and other providers. POLICY IMPLICATIONS Such cuts could increase stress on providers States are facing $300 billion to $400 billion in estimated coping with additional costs, sharply reduced total budget deficits through FY2022, largely because of revenues from declines in service utilization, revenue shortfalls resulting from the pandemic.32 To close and limited (or delayed) federal assistance during the COVID-19 crisis. Reimbursement rate these deficits, as is required by state law in nearly all states, cuts also could reduce access to needed care if states will have to raise revenues through higher taxes, cut providers scale back the services they furnish spending, or both.33 to Medicaid beneficiaries, limit the number of Medicaid is at significant risk of damaging budget cuts, Medicaid patients they see, no longer participate especially for provider reimbursement cuts that could in Medicaid, or cease operations altogether. reduce access to needed care (see box). That is because it Sources: Manatt Health, “Targeted Options for Increasing Medicaid accounted for 19.7 percent of state general fund spending Payments to Providers During COVID-19 Crisis,” State Health and Value Strategies, Apr. 2020; MaryBeth Musumeci et al., Options to in 2019, second only to K–12 education and higher Support Medicaid Providers in Response to COVID-19 (Henry J. Kaiser Family Foundation, June 2020); National Association of Medicaid education, which together accounted for 45.2 percent Directors, “NAMD Joins Medicaid Provider and Plan Groups to of state spending.34 As a consequence, children are at Request Support for Critical Medicaid Providers,” Letter, NAMD, May 8, 2020; and Sarah Klein and Martha Hostetter, Safety-Net Providers considerable risk that state budget cuts could adversely Focus on Population Health and Community Outreach as Part of affect both their access to health care and their education Their Pandemic Response (Commonwealth Fund, Nov. 2020). in the short and longer term.35 commonwealthfund.org Issue Brief, December 2020 Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm7 Medicaid is the largest source of federal funding for states, disproportionately rely on Medicaid for their health constituting 58.2 percent of all federal funding in state coverage. budgets in 2019. Because the federal government picks up 36 Given the long-term benefits of investments in Medicaid a fixed share of states’ Medicaid costs, cuts to the program coverage, policy options during the postpandemic recovery have a significant multiplier effect. With the Families include further improving Medicaid and CHIP coverage First FMAP increase of 6.2 percentage points, every $1 in for children and families and expanding access to needed reduced state spending will result in an additional loss of care. At the federal level, this could involve automatic federal Medicaid funding, ranging from $1.28 in Colorado Medicaid enrollment of newborns, elimination of eligibility to $5.23 in Mississippi in fiscal year 2021. restrictions based on citizenship status, increases in As a result, when a state cuts $1 in its own funding from its minimum Medicaid and CHIP eligibility levels for children, Medicaid program, the actual federal and state Medicaid and expanded continuous eligibility.41 It also could include spending cut is considerably larger — $2.28 to $6.23, one year of postpartum coverage for low-income women to ensure the health of new mothers and their babies.42 depending on the state — and its impact also will be greater (see Appendix).37 Without additional fiscal relief, the Such reforms would likely result in further enhancements adverse effects of these Medicaid cuts on a state’s economy of children’s long-term outcomes. They also would help could deepen and prolong the COVID-19-related recession, improve health outcomes and reduce racial disparities weaken its health care system, and lead to bigger state in many areas, such as maternal and infant health, once budget deficits for a longer period.38 health coverage is more assured. These cuts would likely reduce access to needed care for the tens of millions of children and parents, pregnant CONCLUSION women, people with disabilities, seniors, and other A growing body of research finds that Medicaid coverage adults enrolled in Medicaid. As this review of the of children, and of their mothers during pregnancy, is research indicates, cuts to Medicaid may be particularly associated with improved health, reduced disability, shortsighted. They not only could harm children’s access greater educational attainment, and better financial to needed care in the short term and further exacerbate outcomes when they grow up to be adults. Any cuts to COVID-19-related state budget deficits, but they also could Medicaid to address revenue shortfalls and budget deficits harm children’s long-term outcomes in the areas of health, resulting from the COVID-19 crisis could have a significant disability, education, and financial security. long-term adverse impact. One policy option for addressing state budget shortfalls Providing additional federal Medicaid funding now, as and averting harmful Medicaid cuts is to not only provide a well as permanent, automatic increases in federal support, further temporary increase in federal Medicaid funding but could help ensure access to health coverage and care in also to add a permanent feature to the Medicaid program future economic downturns. Further improvements to Medicaid and CHIP could enhance outcomes for children under which federal Medicaid funding would automatically in adulthood. increase during future economic downturns.39 That would strengthen state Medicaid programs over the long run by ensuring they could avoid harmful cuts and meet the needs HOW WE CONDUCTED THIS STUDY of both new and existing beneficiaries. Such a feature also We conducted a comprehensive review of the research could help Medicaid increase spending to offset reduced literature related to the long-term benefits of Medicaid economic activity and thus shore up state economies coverage of pregnant women and children when children during downturns. This approach also could lead to better 40 reach adulthood. It builds on a prior review of the research life outcomes for low-income children in adulthood. This is literature conducted by the Georgetown University Center especially critical to communities of color, whose children for Children and Families in 2017.43 commonwealthfund.org Issue Brief, December 2020 Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm8 NOTES 1. Georgetown University Center for Children and Families 10.Laura R. Wherry et al., “Childhood Medicaid Coverage analysis of American Community Survey data. and Later-Life Health Care Utilization,” Review of Economics and Statistics 100, no. 2 (May 2018): 287–302. 2. Karina Wagnerman, Medicaid Provides Needed Access to Care for Children and Families (Georgetown University 11. David W. Brown, Amanda E. Kowalski, and Ithai Z. Lurie, “Long-Term Impacts of Childhood Medicaid Expansions Center for Children and Families, Mar. 2017); and Karina on Outcomes in Adulthood,” Review of Economic Studies Wagnerman, Medicaid: How Does It Provide Economic 87, no. 2 (Mar. 2020): 792–821. Security for Families (Georgetown University Center for Children and Families, Mar. 2017). 12.Andrew Goodman-Bacon, The Long-Run Effects of Childhood Insurance Coverage: Medicaid 3. Steven Woolf et al., How Are Income and Wealth Linked Implementation, Adult Health, and Labor Market to Health and Longevity (Urban Institute and Center on Outcomes, NBER Working Paper no. 22899 (National Society and Health, Apr. 2015); and Center on Society Bureau of Economic Research, Dec. 2016). and Health, Education: It Matters More to Health Than 13.Laura R. Wherry and Bruce D. Meyer, “Saving Teens: Ever Before (Center on Society and Health, Feb. 2015). Using a Policy Discontinuity to Estimate the Effects of 4. Tricia Brooks and Allexa Gardner, Snapshot of Children Medicaid Eligibility,” Journal of Human Resources 51, no. 3 (Summer 2016): 556–88. with Medicaid by Race and Ethnicity, 2018 (Georgetown University Center for Children and Families, July 2020). 14.Heeju Sohn, “Medicaid’s Lasting Impressions: Population Health and Insurance at Birth,” Social Science & 5. Sarah Miller and Laura R. Wherry, “The Long-Term Medicine 177 (Mar. 2017): 205–12. Effects of Early Life Medicaid Coverage,” Journal of Human Resources 54, no. 3 (Summer 2019): 785–824. 15.Chloe N. East et al., Multi-Generational Impacts of Childhood Access to the Safety Net: Early Life Exposures 6. Michel H. Boudreaux, Ezra Golberstein, and Donna to Medicaid and the Next Generation’s Health, NBER D. McAlpine, “The Long-Term Impacts of Medicaid Working Paper no. 23810 (National Bureau of Economic Exposure in Early Childhood: Evidence from the Research, Feb. 2019). Program’s Origin,” Journal of Health Economics 45 (Jan. 16.Tanya Byker and Andrew Goodman-Bacon, The 2016): 161–75. Long-Run Effects of Medicaid on Disability Applications (National Bureau of Economic Research, Aug. 2018); and 7. Owen Thompson, “The Long-Term Health Impacts of Goodman-Bacon, Long-Run Effects Childhood, 2016. Medicaid and CHIP,” Journal of Health Economics 51 (Jan. 2017): 26–40. 17. Byker and Goodman-Bacon, Long-Run Effects Medicaid, 2018. 8. Brandy J. Lipton et al., “Lasting Positive Effects on Oral Health of Non-Hispanic Black Children,” Health Affairs 18.Michael Levere et al., “Contemporaneous and Long-Term 35, no. 12 (Dec. 2016): 2249–58. Effects of Children’s Public Health Insurance Expansions on Supplemental Security Income Participation,” 9. Miller and Wherry, “Long-Term Effects,” 2019. Journal of Health Economics 64 (Mar. 2019): 89–92. commonwealthfund.org Issue Brief, December 2020 Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm9 19.Miller and Wherry, “Long-Term Effects,” 2019. 32.Michael Leachman and Elizabeth McNichol, Pandemic’s Impact on State Revenues Less Than Earlier Expected But 20.Sarah R. Cohodes et al., “The Effect of Child Health Still Severe (Center on Budget and Policy Priorities, Oct. Insurance Access on Schooling: Evidence from Public 30, 2020). Insurance Expansions,” Journal of Human Resources 51, no. 3 (Summer 2016): 727–59; and Lincoln H. Groves, 33.Tax Policy Center, “Chapter 5: The State of State (and “Still ‘Saving Babies’? The Impact of Child Medicaid Local) Tax Policy,” in Briefing Book (TPC, June 2020); Kim Rueben and Megan Randall, Balanced Budget Expansions on High School Completion Rates,” Requirements: How States Limit Deficit Spending (Urban Contemporary Economic Policy 38, no. 1 (Jan. 2020): Institute, Nov. 2017); and National Conference of State 109–26. Legislatures, NCSL Fiscal Brief: State Balanced Budget 21.Groves, “Still ‘Saving Babies’?,” 2020. Provisions (NCSL, Oct. 2010). 22.Brown, Kowalski, and Lurie, “Long-Term Impacts,” 2020. 34.In 2019, K–12 education constituted 35.6 percent of state general fund spending, and higher education 23.Cohodes et al., “Effect of Child Health Insurance,” 2016. constituted 9.6 percent of state general fund spending. See National Association of State Budget Officers, State 24.By age 28, each additional year of Medicaid eligibility Expenditure Report: 2019 State Expenditure Report, Fiscal resulted in $1,784 higher cumulative wage income, Years 2017–2019 (NASBO, Nov. 2019). compared with a base cumulative wage income of $136,600. See Brown, Kowalski, and Lurie, “Long-Term 35.To generate support at the federal and state levels for Impacts,” 2020. proposals to cut federal Medicaid funding through block grants and per capita caps, critics of Medicaid 25.By age 28, each additional year of Medicaid eligibility often claim that Medicaid is “crowding out” state K–12 resulted in $533 more in total taxes, compared with a education spending. Instead, such proposals would base of $20,623. See Brown, Kowalski, and Lurie, “Long- likely impose considerable fiscal pressures on overall Term Impacts,” 2020. state budgets. And because K–12 education accounts for the largest share of state general fund spending, it 26.Rourke L. O’Brien and Cassandra L. Robertson, “Early- would likely be at risk for significant cuts. See Edwin Life Medicaid Coverage and Intergenerational Economic Park, Illustrating the Harmful Impact of Medicaid Block Mobility,” Journal of Health and Social Behavior 59, no. 2 Grants and Per Capita Caps on State Funding of K–12 (June 2018): 300–15. Education (Georgetown University Center for Children and Families, July 9, 2020). 27.Brown, Kowalski, and Lurie, “Long-Term Impacts,” 2020. 36.NASBO, 2019 State Expenditure Report, 2019. 28.Goodman-Bacon, Long-Run Effects Childhood, 2016. 37.This is for Medicaid spending subject to the regular 29.Miller and Wherry, “Long-Term Effects,” 2019. FMAP. For the Medicaid expansion (which has a 90% 30.Nathaniel Hendren and Ben Sprung-Keyser, “A Unified matching rate), for every $1 in state Medicaid cuts, Welfare Analysis of Government Policies,” Quarterly federal funding would be cut by $9, equaling an actual Journal of Economics 135, no. 3 (Aug. 2020): 1209–1318. total federal and state cut of $10. For most administrative costs (which have a 50% matching rate), for every $1 in 31.Hendren and Sprung-Keyser, “Unified Welfare Analysis,” state Medicaid cuts, federal funding would be cut by $1, 2020. equaling an actual total federal and state cut of $2. commonwealthfund.org Issue Brief, December 2020 Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm10 38.Edwin Park, “State Budget Cuts to Medicaid Means Reduced Federal Funding, Larger Total Cuts,” Say Ahhh! Blog, Georgetown University Center for Children and Families, May 7, 2020. 39.Matthew Fiedler, Jason Furman, and William Powell III, Increasing Federal Support for Medicaid and CHIP Programs in Response to Economic Downturns (Brookings Institution, May 2019). 40.Cindy Mann and Elizabeth Dervan, “Ensuring People Have the Medicaid Coverage They Need During the Economic Crisis,” To the Point (blog), Commonwealth Fund, May 6, 2020. 41.Kelly Whitener and Joan Alker, Covering All Children (Georgetown University Center for Children and Families, Feb. 2020). 42.Stacy McMorrow et al., Uninsured New Mothers’ Health and Health Care Challenges Highlights the Benefits of Increasing Postpartum Medicaid Coverage (Urban Institute, May 2020). 43.Karina Wagnerman, Alisa Chester, and Joan Alker, Medicaid Is a Smart Investment in Children (Georgetown University Center for Children and Families, Mar. 2017). commonwealthfund.org Issue Brief, December 2020 The Commonwealth Why Short-Term CutsFund to Medicaid Coverage During Pregnancy and How Childhood High Is Could America’s Result Health in Long-Term Care CostHarm11 Burden? 11 Appendix. Impact of State Medicaid Budget Cuts on Federal Medicaid Matching Funds, Fiscal Year 2021 Reduction in federal funding Total Medicaid spending cut State/Territory Regular FMAP Families First FMAP* for every $1 cut in state funding for every $1 cut in state funding Alabama 72.58% 78.78% $3.71 $4.71 Alaska 50.00% 56.20% $1.28 $2.28 Arizona 70.01% 76.21% $3.20 $4.20 Arkansas 71.23% 77.43% $3.43 $4.43 California 50.00% 56.20% $1.28 $2.28 Colorado 50.00% 56.20% $1.28 $2.28 Connecticut 50.00% 56.20% $1.28 $2.28 Delaware 57.74% 63.94% $1.77 $2.77 District of Columbia 70.00% 76.20% $3.20 $4.20 Florida 61.96% 68.16% $2.14 $3.14 Georgia 67.03% 73.23% $2.74 $3.74 Hawaii 53.02% 59.22% $1.45 $2.45 Idaho 70.41% 76.61% $3.28 $4.28 Illinois 50.96% 57.16% $1.33 $2.33 Indiana 65.83% 72.03% $2.58 $3.58 Iowa 61.75% 67.95% $2.12 $3.12 Kansas 59.68% 65.88% $1.93 $2.93 Kentucky 72.05% 78.25% $3.60 $4.60 Louisiana 67.42% 73.62% $2.79 $3.79 Maine 63.69% 69.89% $2.32 $3.32 Maryland 50.00% 56.20% $1.28 $2.28 Massachusetts 50.00% 56.20% $1.28 $2.28 Michigan 64.08% 70.28% $2.36 $3.36 Minnesota 50.00% 56.20% $1.28 $2.28 Mississippi 77.76% 83.96% $5.23 $6.23 Missouri 64.96% 71.16% $2.47 $3.47 Montana 65.60% 71.80% $2.55 $3.55 Nebraska 56.47% 62.67% $1.68 $2.68 Nevada 63.30% 69.50% $2.28 $3.28 New Hampshire 50.00% 56.20% $1.28 $2.28 New Jersey 50.00% 56.20% $1.28 $2.28 New Mexico 73.46% 79.66% $3.92 $4.92 New York 50.00% 56.20% $1.28 $2.28 North Carolina 67.40% 73.60% $2.79 $3.79 North Dakota 52.40% 58.60% $1.42 $2.42 Ohio 63.63% 69.83% $2.31 $3.31 Oklahoma 67.99% 74.19% $2.87 $3.87 Oregon 60.84% 67.04% $2.03 $3.03 Pennsylvania 52.20% 58.40% $1.40 $2.40 Rhode Island 54.09% 60.29% $1.52 $2.52 South Carolina 70.63% 76.83% $3.32 $4.32 South Dakota 58.28% 64.48% $1.82 $2.82 Tennessee 66.10% 72.30% $2.61 $3.61 Texas 61.81% 68.01% $2.13 $3.13 Utah 67.52% 73.72% $2.81 $3.81 Vermont 54.57% 60.77% $1.55 $2.55 Virginia 50.00% 56.20% $1.28 $2.28 Washington 50.00% 56.20% $1.28 $2.28 West Virginia 74.99% 81.19% $4.32 $5.32 Wisconsin 59.37% 65.57% $1.90 $2.90 Wyoming 50.00% 56.20% $1.28 $2.28 American Samoa 83.00% 89.20% $8.26 $9.26 Guam 83.00% 89.20% $8.26 $9.26 Northern Mariana Islands 83.00% 89.20% $8.26 $9.26 Puerto Rico 76.00% 82.20% $4.62 $5.62 U.S. Virgin Islands 83.00% 89.20% $8.26 $9.26 Note: FMAP = Federal Medical Assistance Percentage. * Families First (P.L. 116-127) FMAP increase in effect starting January 1, 2020, and for any subsequent calendar year quarter during which COVID-19 public health emergency declaration remains in effect. Some Medicaid spending is subject to a different matching rate (e.g., 90% for the Medicaid expansion and 50% for most administrative costs); as a result, the “multiplier” effect also will be different. Data: Georgetown University Center for Children and Families (CCF) analysis. commonwealthfund.org Issue Brief, December 2020 Why Short-Term Cuts to Medicaid Coverage During Pregnancy and Childhood Could Result in Long-Term Harm12 ABOUT THE AUTHORS ACKNOWLEDGMENTS Edwin Park, J.D., is a research professor at the McCourt The authors would like to thank Lauren Roygardner, School of Public Policy at Georgetown University. His Kaitlyn Borysiewicz, Aubrianna Osorio, and Cathy Hope work at the Georgetown University Center for Children for their contributions to the brief. and Families primarily focuses on Medicaid, CHIP, and The Georgetown University Center for Children and the Affordable Care Act, and he is a leading health policy Families is an independent, nonpartisan policy and expert on Medicaid and CHIP financing issues. He has a research center founded in 2005 with a mission to expand J.D. from Harvard Law School and an A.B. in public and and improve high-quality, affordable health coverage international affairs from Princeton University. for America’s children and families. CCF is based at the Joan Alker, M. Phil., is the executive director and McCourt School of Public Policy. cofounder of the Georgetown University Center for Children and Families, and a research professor at the McCourt School of Public Policy at Georgetown University. Editorial support was provided by Laura Hegwer. She is the lead author of an annual report on children’s health coverage status and an expert on Medicaid section 1115 demonstration policy. Alker holds a master of For more information about this brief, please contact: philosophy in politics from St. Antony’s College, Edwin Park, J.D. Oxford University and an A.B. in political science from Research Professor Bryn Mawr College. Center for Children and Families McCourt School of Public Policy Alexandra Corcoran is a research associate at the Georgetown University Georgetown University Center for Children and Families. Edwin.Parkgeorgetown.edu She holds a master of philosophy and public affairs from University College Dublin and an A.B. in political science Joan Alker, M.Phil. and Spanish from Haverford College. Executive Director/Research Professor Center for Children and Families McCourt School of Public Policy Georgetown University jca25georgetown.edu commonwealthfund.org Issue Brief, December 2020 About the Commonwealth Fund The mission of the Commonwealth Fund is to promote a high-performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable, including low-income people, the uninsured, and people of color. Support for this research was provided by the Commonwealth Fund. The views presented here are those of the authors and not necessarily those of the Commonwealth Fund or its directors, officers, or staff.