Talking Points: Medicaid and the Federal Deficit
Families USA, November 2012  [pdf]

The Threat

Conservative opponents of government programs are using the federal deficit as an excuse to make deep cuts in the Medicaid program.

Our Response

• Yes, we should bring down the deficit over time ... BUT, we must be fair and balanced in how we do it. [−]
|Deficit reduction based on cuts alone will stifle economic growth. It would undermine essential government programs that provide jobs, either directly or indirectly.


• We can—and should—cut defense spending. [−]
|Defense experts, such as Lawrence Korb, who served as assistant secretary of defense in the Reagan administration, believe that there is plenty of room to make cuts to defense spending.¹ And in terms of federal spending that stimulates the economy, healthcare spending creates more jobs than defense spending.²


• We can—and should—raise revenue. [−]
|There's room to raise revenue. We can raise revenue by getting rid of tax loopholes that let corporations avoid or substantially reduce taxes and by asking the wealthiest Americans to pay more.
• We can close corporate loopholes. Tax loopholes, write-offs and other ways of lowering income let corporations avoid or substantially reduce taxes. That costs the government billions.^3,4
• The wealthiest can pay more. Today, income inequality in the United States is higher than it has been in decades.⁵ At the same time, tax rates on the wealthy are historically low.⁶ Asking the richest Americans to pay more in taxes is a far better choice than cutting health care.

• Medicaid should not be cut to deal with the deficit.


• Federal Medicaid cuts will hurt states by...

    ... Increasing their costs [−]
|States can't afford to pick up the costs of lost federal funds. Cutting federal Medicaid funds doesn't make health care costs go away. It does shift Medicaid costs to states. States, still struggling to recover from the recession, are not in a position to make up for lost federal funds.⁷


    ... Hurting their economy [−]
|Federal Medicaid spending stimulates economic activity and job growth in every state. A 15 percent cut in federal Medicaid spending would mean more than a $41 billion loss for state budgets.⁸


    ... Ending the flexibility needed to respond to fiscal and health care crises [−]
|Medicaid is structured so that the federal government automatically helps states to take care of additional people, or cover additional health costs, when needed, like during an economic downturn, natural disaster, or health care crisis. Cutting federal spending, or changing Medicaid's structure through a block grant or per capita cap would take away that extra help. States would have to address crises on their own.,


    ... Harming their health care infrastructure [−]
|Our health care system depends on Medicaid. Medicaid accounts for 16 percent of all U.S. health care spending and 17 percent of all hospital spending.⁹ It keeps health care providers in business and funds medical student training. Cutting Medicaid would force states to reduce payments to hospitals, doctors, home health agencies, and other health care providers. That would strain America's health care infrastructure, making it less able to serve all of us.



• Medicaid cuts will harm middle class families by...

    ... Reducing funding for long term care [−]
|Medicaid helps relieve the burden of long-term care costs for middle-class families who have a parent or child who needs it. Medicaid is the largest payer of long-term care in the country, including nursing home and home- and community-based care. These are costs Medicare doesn't cover.


    ... Curbing critical help for families of people with disabilities [−]
|Medicaid helps children and adults with disabilities, and their families, by providing home and community based care. 15 percent of all people in Medicaid have a disability.


    ... Raising health care premiums for everyone [−]
|Cutting Medicaid would mean higher health care costs for everyone. There would be more people without any insurance who would turn to emergency rooms for the care they need. Many of them would not be able to pay for that care. The costs of their unpaid care would get passed on to businesses and people with insurance in the form of higher insurance premiums.¹⁰ That ends up costing everyone more.



• Medicaid cuts will harm our most-vulnerable citizens by...

    ... Cutting health care for children [−]
|Medicaid helps kids get the health care they need to stay healthy and do well in school. When kids aren't healthy, their school performance suffers.¹¹ That affects their chances later in life. By helping kids stay healthy so they can do well in school, Medicaid is an investment in our future.


    ... Reducing health and long-term care for seniors and people with disabilities [−]
|More than 25 percent of seniors and people with disabilities rely on Medicaid to help pay for their health and long-term care.¹² With less federal funding for Medicaid, more of the cost of that care would fall on those seniors, people with disabilities, and their families.


    ... Reducing long-term services that help people keep living in the community [−]
|Most people who need long-term care would far prefer to stay in their homes or in the community, rather than in an institution. Medicaid helps millions of people do that. Nearly 45 percent of all Medicaid long-term care spending is for care that helps people stay out of nursing homes.¹³



• Medicaid works...

    ... Medicaid is an efficient program with no "fat" to spare. [−]
|Administrative costs in Medicaid are extremely low. More than 96 percent of federal Medicaid spending goes to pay for health care and long-term care for program enrollees, not overhead.¹⁴


    ... Medicaid has extended quality health care to millions of Americans [−]
|People who have Medicaid rate their care highly and say they get the care they need when they need it.¹⁵


    ... Medicaid has improved people's lives and health [−]
|A randomized controlled study of individuals who received Medicaid and individuals who remained uninsured found that having Medicaid improves individuals' access to care, health status, and financial security.¹⁶

Endnotes [−]