Committee for a Responsible Federal Budget

Families First Coronavirus Response Act Will Cost $192 Billion

Last week, the Congressional Budget Office (CBO) scored the Families First Coronavirus Response Act (FFCRA), the second of three packages enacted so far to address the public health and economic fallout from the novel coronavirus (COVID-19) pandemic. FFCRA follows the $8.3 billion in emergency funding lawmakers approved in early March and has since been followed by a third bill — the $2.3 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. CBO estimates that FFCRA will add $192 billion to the federal deficit over the 2020-2030 budget window, with almost all of the cost occurring in 2020 and 2021. 

More than half of the cost - $105 billion - comes from a new tax credit for COVID-19 related paid leave. The FFCRA requires employers with fewer than 500 employees to offer two weeks of paid sick leave and an additional 10 weeks of  paid family and medical leave for employees who are unable to work or telework for a variety of COVID-19 related purposes (becoming infected, showing symptoms and awaiting diagnosis, advised to self-quarantine, needing to take care of a child whose school has been cancelled, etc.). The legislation compensates employers for this leave through a tax credit for the full cost of up to 2 weeks of sick leave (capped at $511 per day) and two-thirds of the cost of covering wages for extended leave or caretaking (capped at $200 per day).

FFCRA also increases the federal share of Medicaid payments, raising the Federal Matching Assistance Percentage (FMAP) by 6.2 percentage points in all states through the last day of the quarter in which the COVID-19 emergency ends. This increase costs about $50 billion, according to CBO.

In addition, the bill suspends the work training requirements for the Supplemental Nutrition Assistance Program (SNAP, "food stamps"), and allows states to request special waivers to provide emergency SNAP benefits up to the maximum monthly allotment to households currently enrolled in the program ($21.2 billion). FFCRA also waives Medicare, Medicaid, and Children's Health Insurance Program (CHIP) cost-sharing for all COVID-19-related diagnostic testing and any associated physician or emergency room visits ($8.6 billion). The bill federally funds unemployment insurance (UI) Extended Benefits, which is normally 50 percent state-funded, and provides up to $1 billion in emergency administrative grants to states, contingent on whether states waive the one-week waiting period and work search requirements for unemployment benefits ($4.7 billion). Finally, $2.4 billion in emergency supplemental appropriations are made to various federal agencies for COVID-19 related purposes.

Category Cost
Require Paid Sick Leave and Paid Medical Leave for certain businesses $105 billion
Increase Medicaid FMAP by 6.2 percentage points  $50 billion
Increase SNAP ("food stamp") benefits  $18.5 billion
Waive private insurance, Medicare, & Medicaid/CHIP cost sharing for COVID-19-related diagnostic testing and medical care  $8.6 billion
Expand Unemployment Insurance benefits  $4.7 billion
Waive SNAP work requirements  $2.7 billion
Supplemental Appropriations  $2.4 billion
Other spending  <$1 billion
Subtotal  $192 billion

Source: House Committee on Appropriations, Congressional Budget Office, CRFB calculations.

To generate these estimates, CBO assumes that unemployment will rise from 3.5 percent in February to an average of 12 percent in the second quarter of 2020 before falling to 9 percent by the end of 2021 as social distancing diminishes. The estimates are not CBO's predictions, but rather a best guess in the middle of a very wide range of possible outcomes. They do not account for potential economic improvements that could result from FFCRA or the $2.3 trillion CARES Act.

It is emergencies like this that illustrate why the country needs to be on sounder fiscal ground. Getting our fiscal house in order would help better prepare us to respond to future urgent matters when they arise.