States made money on Medicaid during COVID, but some lost big

During the COVID-19 pandemic, the federal government increased its share of state Medicaid costs, but only if states kept everyone enrolled. States worried this would be an unfunded mandate, but it turns out most states actually received more federal money than they spent.

Everyone assumed states would get stuck with the bill for keeping people on Medicaid during the pandemic. This paper shows that, on average, the federal funding increase more than covered those costs. This means the federal government effectively subsidized state Medicaid programs, but the benefit was not evenly distributed. Some states ended up with a significant surplus, while others faced a deficit.