Washington, D.C. — Medicaid rule changes put in place by the Bush Administration will cost Colorado more than $787.2 million in federal funds over the next five years. The cut in federal funding will, in fact, act like a giant anti-stimulus package. Those lost Medicaid funds will eliminate an estimated 3,500 jobs and an accompanying $134.9 million in wages, and cost the state an estimated $381 million in lost business activity.
Virtually all that economic pain comes in the first year of implementation, when Colorado would fail to receive approximately $157.4 million in Medicaid payments, says a report released today by Families USA, the national organization for health care consumers. Titled “Bad Medicine,” the report analyzes the economic impact of seven new Medicaid regulations that were issued in 2007.
“The devastation caused by the Administration’s cuts will affect millions of people who rely on Medicaid for their health lifeline. This will be tragic for their families,” Ron Pollack, Executive Director of Families USA, said today.
“Additionally, these cuts will harm state budgets at the worst possible time. These cuts in federal Medicaid payments will have a ripple effect through state economies that are already struggling during this economic downturn. This economic harm will increase the number of people who may need Medicaid, as thousands of Coloradans see their paychecks being cut or their jobs being eliminated.
“This lost business activity in Colorado will hurt business and industry, and it will force governors and state legislators to make increasingly difficult choices about providing state services,” Pollack said. “The Bush Administration’s decision is ill-timed and ill-considered, and it should be reversed by Congress.”
"The Medicaid administrative rule changes put forth by the Bush Administration would decimate Colorado's and the nation's health care safety net and hamper our ability to serve some of our most vulnerable populations," U.S. Senator Ken Salazar (D-CO) said today. "Without these critical programs, all patients in our communities will be negatively impacted.
"These policy changes would deprive Colorado of nearly $800 million in federal Medicaid funding over the next five years, impacting hospitals and the people they serve in every corner of the state," Salazar said. "I am grateful to Families USA for once again highlighting the tremendous impact these rule changes will have on Colorado's economy as well as its people."
“The Bush Administration's ill-conceived alterations of the Medicaid system will have a drastic affect on Colorado's entire safety-net,” U.S. Rep. Diana DeGette said today. DeGette is Vice Chair of the House Energy and Commerce Committee, which has jurisdiction over health care policy.
“The Families USA Report offers another chilling perspective that these regulations would severely harm our state,” DeGette said. “With our economy stumbling and health care costs rising, we cannot afford another blow to our local economy as hospitals face the real threat of closing their doors. Congress is working aggressively to halt the implementation of these draconian regulations. It is a top priority to pass bipartisan legislation, placing a temporary, one-year moratorium on the rules, expected in the House soon.”
The seven regulation changes issued by the Bush Administration in 2007—and imposed on states without congressional review or debate—restrict funding for a variety of Medicaid services, including rehabilitation services and school-based transportation, as well as Medicaid administrative services, such as outreach, enrollment, and case management. The seven rule changes are now either under a congressional moratorium or awaiting implementation.
The Families USA “Bad Medicine” report for Colorado is based on the latest version an economic modeling tool known as the Regional Input-Output Modeling System, or RIMS II. Developed by the U.S. Department of Commerce, RIMS II has been used extensively for a variety of major projects calling for economic projections, such as military base closures, hospital and airport expansions, and the impact of natural disasters on regional economies.
“There is a multiplier effect when dollars stop coming into a state like Colorado,” Pollack said, “and whether Colorado loses funding because a business has closed or because a federal agency has reduced funding for a state program, the impact is the same—there are fewer dollars on the move in the state,” Pollack said.
“As our analysis makes clear, allowing these regulations to be implemented would be bad for Colorado’s families, who will need the Medicaid safety net more than ever in the coming months,” he said. “It is also the wrong choice for Colorado’s economy, which will be dramatically weakened by these cuts.”
All 50 states are affected by the Medicaid rule changes, Pollack said.
