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Nov. 27, 2020, 11:34 a.m. EST

Medicaid cuts on the table as states grapple with impact of pandemic on program enrollment

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By Stephanie Armour

State leaders are weighing possible cuts to Medicaid services and health-care benefits to offset rising costs due to a surge of enrollees who have lost jobs and need health coverage as the coronavirus pandemic has intensified.

Congress boosted federal matching funds to states for Medicaid as part of its first coronavirus relief package, but many states are still struggling to afford the increasing pace of sign-ups in the program for low income and disabled people. Enrollment for the fiscal year ending Sept. 30, 2021, is expected to jump 8.2%, with state spending accelerating by 8.4%, compared with 6.3% growth in the previous fiscal year, based on data from 42 state Medicaid directors compiled by the Kaiser Family Foundation.

Medicaid has grown to become one of the largest portions of state budgets, from about 21% in fiscal 2008 to about 30% in fiscal 2018, according to  the National Association of State Budget Officers .

State leaders working on budgets that must be finalized in July are confronting budget crises. Tax revenues have tumbled since March because of restrictions on businesses, social distancing and high unemployment related to the pandemic, economists have found. Most states have constitutional or statutory requirements that they maintain balanced budgets.

Some state leaders may try to narrow the gap between the revenues they need to balance the budget and the shortfalls they face by cutting vision and dental benefits, or payments to doctors and other providers. Cuts to other programs, such as education, could also be in the mix.

An expanded version of this report appears at WSJ.com.

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