As the coronavirus sweeps across the nation, states are facing steep drops in tax revenue due to spiking unemployment numbers, leading some to turn to Medicaid cuts if no federal funding becomes available, according to POLITICO.
The crisis that Medicaid programs face “is going to be the ’09 recession on steroids,” said Matt Salo, head of the National Association of Medicaid Directors. “It’s going to hit hard, and it’s going to hit fast.”
As one of the largest budget items for most states, Medicaid programs provide health insurance to around 70 million poor adults, children, the disabled and pregnant women, and the federal government on average pays around 60 percent of program costs, POLITICO reported.
Now state governors see Congress as their source of help, in the scenario that it delivers a new package to aid state budgets during the pandemic.
“The cruel nature of the economic downturn is that at a time when you need a social safety net is also the time when government revenues shrink,” said Ohio Gov. Mike DeWine, a Republican, said. On Tuesday, he announced $210 million cuts to his state’s Medicaid program in the next two months.
In Colorado, the Democratic Governor Jared Polis announced a $229 million spending cut, the vast majority of which was made to Medicaid. In Georgia, Republican Governor Brian Kemp instructed the state agency for an upcoming 14 percent reduction across the board. Both states have seen large increases in Medicaid enrollment as unemployment numbers skyrocket.
Alaska Governor Mike Dunleavy, a Republican, also cut state Medicaid budgets by $31 million last month, and stated that the temporary 6 percent in federal payment for Medicaid could make up for the spending cut made by the state. Indeed, many state officials believe that the federal temporary aid, while helpful, will likely be evened by the expected enrollment increase.
According to POLITICO, between 11 million and 23 million more people could enroll in Medicaid in the next few months. In New Mexico, for example, where already 42 percent of the population receive benefits from Medicaid, the first two weeks of April already saw about 10,000 more sign-ups.
As Congress bars enrollment cut-back for states with temporary Medicaid payment increases, the states could only either cut benefits or provider payments in order to balance Medicaid spending.
“Now, we’re looking at greater declines than what we saw during the Great Recession and increased spending,” said Brian Sigritz of the National Association of STate Budget Officers. “If there aren’t more federal funds, states will have to look at cutting funding for key services: public safety, education, health care. That’s where the money is.”
In previous economic recessions, state Medicaid programs have experienced deep cuts in everything from dental to podiatry care, and witnessed payment reduction to hospitals and doctors, when other major facilities such as schools, roads and prisons also need spending. Medicaid officials warned that because of Obamacare’s expansion, the current round of Medicaid cuts could be even worse.