There is a wide range of good and bad in the massive $2 trillion economic rescue package that just unanimously passed the Senate. But amid the good, there’s one particularly important change that will help fortify the safety net through the brutal times to come.

A provision that originally would have excluded nonprofits that receive Medicaid funding from accessing the bill’s hundreds of billions of dollars in assistance to small businesses has been removed from the bill. This came after aides in both parties agreed to the change, I’m told.

In particular, financial assistance will now be available to countless nonprofits that get Medicaid funding, such as home and community-based disability services providers; community-based nursing homes, health centers and mental health providers; and rape crisis centers.

Though there is a caveat here, this is an important change. It illustrates the degree to which an all-hands-on-deck approach by many elements of society will be needed to help cushion the awful repercussions that a punishing recession could inflict on the most vulnerable among us.

One of the most important pillars of the package is that it makes $350 billion in loans available to small businesses. It also relieves them of having to repay most of the money if they don’t lay off workers, making it possible to keep them employed while the flow of customers craters amid massive social distancing.

The basic goal here, as Jim Tankersley notes, is in effect to pay small businesses not to close or lay off workers, allowing them to return to jobs and restart the economy later — facilitating efforts to stop the coronavirus’s rampage without too much collateral economic damage.

As this blog recently reported, an earlier version would have excluded “nonprofits receiving Medicaid expenditures” from receiving such loans. The idea was to exclude Planned Parenthood, to prevent a partisan war over abortion from tanking the whole measure, but a close reading suggested countless other groups would get swept in.

Now that provision has been removed from the bill.

“We are thrilled that the final bill does not directly exclude small Medicaid-receiving nonprofits from getting small-business loans,” Mara Youdelman, the managing attorney of the National Health Law Program’s Washington office, told me. “These form the backbone of the safety net.”

According to a senior Republican aide, drafters in both parties agreed that the original language, while targeted toward Planned Parenthood, could also implicate numerous other nonprofits whose patients receive Medicaid. That led to an agreement to remove the language.

Good and bad

There is a lot to like and dislike in the broader package.

The aid to states is good, but epicenters such as New York will need a lot more money in future packages. There are some important conditions attached to big-business bailouts, but many conditions were left out, and the oversight of that spending could prove insufficient.

That said, the consensus among progressive economists and fiscal watchdogs is that the package’s expansions to unemployment insurance, its paid leave provisions and its direct cash payments really could cushion the blow for millions.

Here, too, the principle is to enable people to not work to limit the disease’s spread. But that will inevitably result in massive dislocations: We’re just learning that a staggering 3.28 million people filed jobless claims last week.

All of this economic carnage will likely get much worse. And that’s where the odd role of nonprofits that receive Medicaid funding comes in.

We need these nonprofits

As it is, tens of millions of people across the country might be reliant on such programs, according to Youdelman. A punishing economic downturn can create a surge in demand for such services. That’s in part because the ranks of the vulnerable swell, and in part because such crises exacerbate social problems that make such services more necessary.

That can mean more customers who pay with Medicaid, but Medicaid historically underpays for services. Which means that even as payroll and expenses to meet demand grow, Medicaid might not keep pace, especially with dramatically stretched state budgets. That means these nonprofits can face strains similar to ones that for-profit small businesses do.

“State Medicaid systems will be stretched with the health-care crisis,” Nicole Jorwic, senior director of public policy at the Arc, a national organization for people with disabilities, told me. “These funds will allow our chapters to stay open and pay staff to support people who may be most at-risk for contracting COVID-19.”

A big caveat

There’s one crucial caveat. Another portion of the bill restricts loans from nonprofits with more than 500 employees. This could conceivably allow for loans to be withheld from smaller nonprofits that are part of a large chain under one management.

“We believe that no health-care provider should be excluded,” Youdelman told me.

But many nonprofits are not part of a larger organization. And ultimately, the bill makes this discretionary, Youdelman notes: It allows the Small Business Administration to award loans to individual chapters in a larger chain if it decides to. Public pressure and scrutiny from lawmakers could make it harder to refrain from doing that.

Indeed, this opens a window on the sausage-making required for massive packages such as this one. This compromise appears to allow the exclusion of Planned Parenthood — avoiding an existential political struggle — while also creating discretion for loans to go to other multi-chapter nonprofits and countless individual ones.

The bottom line is that the removal of the offending provision will probably make the safety net somewhat tighter than it otherwise might have been, at a time when more people are at great risk of falling through it than ever.

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