Medicaid and Fiscal Federalism During the COVID-19 Pandemic

Jeffrey Clemens, Benedic N. Ippolito and Stan Veuger

No 28670, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze the effects of the COVID-19 pandemic on state and local government finances, with an emphasis on health spending needs and the role of the Medicaid program. We arrive at three conclusions. First, we find that nationwide, and over the entirety of the federal budget window, the enhanced federal matching funds are of roughly the same magnitude as expected increases in state Medicaid costs. There is a difference in timing, however, as projected relief funds are more concentrated in the near term than projected spending needs. Second, we show that there is substantial variation in states’ exposure to increases in Medicaid program costs. Third, we evaluate the extent to which federal aid has been targeted at states with large increases in Medicaid costs. We show that the enhanced Medicaid matching funds are quite weakly correlated with variations in states’ cost increases. In contrast, the state aid formula in the American Recovery Plan Act appears, to at least a moderate degree, to direct dollars toward states with large increases in their Medicaid enrollments.

JEL-codes: H72 H75 H77 (search for similar items in EconPapers)
Date: 2021-04
New Economics Papers: this item is included in nep-hea and nep-ias
Note: EH PE
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Citations: View citations in EconPapers (5)

Published as Jeffrey Clemens & Benedic Ippolito & Stan Veuger, 2021. "Medicaid and fiscal federalism during the COVID‐19 pandemic," Public Budgeting & Finance, vol 41(4), pages 94-109.

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Journal Article: Medicaid and fiscal federalism during the COVID‐19 pandemic (2021)
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