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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