Washington, D.C. — Medicaid rule changes put in place by the Bush Administration will cost Connecticut more than $417.5 million in federal funds over the next five years. The cut in federal funding will, in fact, act like a giant anti-stimulus package. The lost Medicaid funds will eliminate an estimated 1,500 jobs and an accompanying $62.8 million in wages, and cost the state an estimated $174.6 million in lost business activity.
Virtually all that economic pain comes in the first year of implementation, when Connecticut would fail to receive approximately $83.5 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 hundreds of Connecticuters see their paychecks being cut or their jobs being eliminated.
“This lost business activity in Connecticut will hurt business and industry, and it will force governors and state legislators to make increasingly difficult choices about providing state services,” Pollack said. “This Bush Administration’s decision is ill-timed and ill-considered, and it should be reversed by Congress.”
“This report shows that the Bush Administration’s regulations on Medicaid are undermining the health care safety net of the people of Connecticut,” U.S. Sen. Chris Dodd (D-CT) said today. “Thousands of low income residents in our state could lose necessary health benefits because of these cuts, especially children and people with disabilities. At a time when our country is likely in a recession, it makes no sense to deprive the people of Connecticut of these necessary funds.”
"This report underscores the point that these cuts will be very harmful to so many critical health programs in Connecticut," U.S. Rep. Chris Shays (R-CT) said today. "Congress has rejected these on a bipartisan basis when they have been proposed for legislative action, and I hope we will reject them now that they are being done administratively, too. I am a cosponsor of H.R. 5613, which would delay these cuts."
“These proposed Medicaid cuts demonstrate how out-of-touch the Bush Administration is with the effect of the economic downturn on American families,” U.S. Rep. Rosa L. DeLauro (D-CT) said today. “Americans face higher gas prices, health care costs continue to rise, and it costs more to put food on the table.
“Despite the increasing numbers of Americans likely to use Medicaid, the Bush Administration plans to slash Medicaid funding. In real dollars - Connecticut will lose $83.5 million in federal funding – increasing the strain on the state’s already stressed budget,” DeLauro said. “That is why I am fighting for passage of legislation that I introduced with my colleagues to shelve these cuts. We have a moral responsibility to protect the most vulnerable among us and the Administration’s proposed rule change ignores that responsibility.”
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 Connecticut 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 Connecticut,” Pollack said, “and whether Connecticut 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 Connecticut’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 Connecticut’s economy, which will be dramatically weakened by these cuts.”
All 50 states are affected by the Medicaid rule changes, Pollack said.
