NEW: At 7 am Eastern Mnuchin, on behalf of Trump, pulled out of the agreement they had reached at 4 am to provide relief for Americans impacted by the Coronavirus. The package was the right thing.
He now wants more things Pelosi won’t agree to. I don’t know what they are.
— Andy Slavitt (@ASlavitt) March 13, 2020
Last night, Speaker Pelosi’s office acknowledged that they were 95% of the way to a short term emergency response deal with the White House. The Senate has implicitly made clear that they will vote for whatever Speaker Pelosi and Secretary Mnunchin can agree upon.
Language has yet to be released. Lots of federal money will be flowing to states via a Medicaid payment bump.
The fastest way for Congress to help states responding to #COVID19 is to increase the Federal Medical Assistance Percentage (FMAP), which will provide immediate Medicaid funds to confront the #CoronavirusPandemic across our country https://t.co/HyT5RXAhvl
— Bill Frist, M.D. (@bfrist) March 12, 2020
FMAP is what the federal government pays for Medicaid. The ACA Medicaid Expansion population gets a flat FMAP of 90%. Most of the rest of Medicaid gets an FMAP that varies by state. Poorer states have a bigger FMAP so for every dollar Mississippi spends on Medicaid, the federal government will spend three. However ever dollar that Massachusetts spends on Medicaid, the feds will only match it with one additional dollar. An FMAP bump of eight points will increase the multiplier effect of each state dollar.
An FMAP bump is an action that will need minimal administrative plumbing and no new rule making. If an FMAP bump is signed into law this week, states can book the expected increase of federal revenue on Monday morning by the second cup of coffee. I’ve been scarred by the Great Recession and automatic or quasi-automatic very fast to implement counter-cyclical programs are very attractive to me. In December 2018, I was writing about the maintenance of effort requirements of the Center for American Progress healthcare plan and that thought was front of mind:
From a policy angle, I am scarred by the 2008-2010 Great Recession. I want as many automatic stabilizers that are not tied to balance budget requirements as possible. One of the big chunks of the stimulus bill was an enhanced federal Medicaid payment rate which allowed states to not cut budgets as deeply as they normally would have. We don’t want 50 Mini-Hoovers squeezing out Medicaid.
And in 2016:
8) Issue is still the 50 mini-Hoover problem in serious economic downturns.. no idea how to fix that without federalization of funding
— David Anderson (@bjdickmayhew) August 14, 2016
The US Federal Government has an unmatched ability to absorb risk. It can eat risk that would force any other entity to vomit without even getting heart burn. The FMAP bump that is likely to be in the first emergency response bill is just one of the easiest ways for the Feds to take on systemic risk that would otherwise cripple state budgets.