Chapter 1 addresses the challenge that states face during recessions when Medicaid enrollment grows and state revenues decline. State and federal Medicaid spending supports state economies, and increases in Medicaid spending can counteract other spending reductions during a recession. If state revenue is declining, states can find it hard to finance their share of growing Medicaid expenditures.
In this Chapter, the Commission recommends that Congress should amend the Social Security Act to provide an automatic Medicaid countercyclical financing model, using the prototype developed by the U.S. Government Accountability Office as the basis. This would ensure that additional federal funds flow quickly to Medicaid during economic downturns and would give states greater budget predictability.
From: March 2021 Report to Congress on Medicaid and CHIP