How Medicaid will be affected by the recession

About half the uninsured who will get health care coverage under reform will get it through Medicaid, the state programs that provide health care for the poor and near-poor. Those programs are now more than 60 percent federally funded.

A story in the New York Times reveals that the recession has pushed those programs to the brink of bankruptcy. Unless Blue Dogs in Congress join with their more liberal Democratic colleagues to appropriate more money for Medicaid, states will have to institute massive cuts in other social services such as schools and police to make up the shortfall.

One statistic in the story caught my eye. The recession will increase Medicaid enrollments by 21 percent between 2009 and 2011. Since about 45 million Americans were on Medicaid last year, that translates into an increase of more than 9 million people.

And that’s without reform. According to the Congressional Budget Office’s final projections, the Patient Protection and Affordable Care Act’s plan to open Medicaid to working but lower-income Americans would add about 16 million Americans to state Medicaid programs by 2019. Unless this “recovery” begins creating jobs soon, those estimates will have to be revised sharply higher.

It will be interesting to see how the budget hawks in Washington, especially conservative Democrats and even some Republicans, respond to the states. Many state and local officials are, like themselves, fiscally conservative. Will those local officials go along with laying off teachers and cops to meet the matching requirements of a federal entitlement program? Will they join more progressive states in demanding relief? Or will the backlash against reform and expanding Medicaid gather steam?

The Times story took the easy route in quoting officials from the highest Medicaid spending regions like New York, Pennsylvania and California. But this is a national problem. The recession is everywhere, as is joblessness and the resulting falloff in state tax revenues. The coming vote on increasing federal subsidies for Medicaid will be an early test of the rising political power of budget hawkery, and could be an early test of the staying power of reform.

Merrill Goozner is a freelance writer, independent researcher and consultant who blogs at Gooznews on Health.

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  • BladeDoc

    It’s amazing how they always have to lay off cops and teachers in a budget crunch and not the layers upon layers of mid level managers that have swollen the bureaucracy over the last twenty years. Or god forbid let a bunch of them get a pay cut in lieu of firing like happens in the “civilian” world. Or get rid of some of their gold-plated benefits. Nope, nothing to do but fire teachers and police. Could someone have noticed this behavior before?

  • http://nostrums.blogspot.com Doc D

    I agree. Why is it always cops and teachers that we’re faced with laying off? Can’t we cut other pork barrel stuff that Congress sends to their districts? And, while the private market has laid off millions of jobs, the public employee rolls have climbed (and their salaries and benefits how waay outstripped their counterparts) . Start cutting wasteful positions, and under-performers. Every city and state has them. We don’t need phone-answerers and legions of benefit counselors..

    When I was in high school we had 3 counselors (one for each grade), one librarian, one secretary, a vice-principal, and a principal (along with some housekeeping and cooks). Everybody else was a teacher. Isn’t it amazing that education was so much more effective back then?

  • http://notwithstandingblog.wordpress.com The Notwithstanding Blog

    Follow the incentives.

    If you present “teachers and cops” as the only feasible object of cuts, you make the public more likely to go along with tax increases / other service cuts / pressure on the federal government for more funding, etc., so as to avoid those cuts.

    If they were to propose shrinking government in the ways described by the previous commenters, well… people just might be okay with that.

    This isn’t to say that all teaching and public safety jobs are justifiable (public safety jobs tend to be more expensive from a pension point of view, and California’s prison system is a great example of an out-of-control union boondoggle), but I think the political considerations definitely come into play.

  • PAULMD

    @Bladedoc

    You forgot to add sanitation engineers to the visible threat of layoffs.

    cops, firefighters teachers, trash collectors and road crews are the lion share of what I would expect my taxes to go to. No one notices the termination of the bloated beaurocrats so what political agenda does that serve.

    Strip it down to bare metal and rebuild….sans unions.

  • ninguem

    The Washington Monument ploy. Faced with budget cuts, they find something photogenic to close.

    Shut down a Washington DC tourist attraction. In my area it was to take some low-risk offenders and let them out a little early. Make sure the press is invited to the release.