Families USA Report: Michigan Will Lose 15,300 Jobs, $1.5 Billion in Business Activity Due to Bush Administration’s Medicaid Cuts

Michigan to Lose $3.9 Billion in Medicaid Funding if Administration’s Medicaid Rule Changes Are Allowed to Stand

Washington, D.C. — Medicaid rule changes put in place by the Bush Administration will cost Michigan more than $732.2 million in federal funds over the next five years. The cut in federal funding will, in fact, act like a giant anti-stimulus package. The lost Medicaid funds will eliminate an estimated 15,300 jobs, and an accompanying $572.4 million in wages, and cost the state an estimated $1.5 billion in lost business activity.

Virtually all that economic pain comes in the first year of implementation, when Michigan would fail to receive approximately $732.2 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 insult will increase the number of people who may need Medicaid, as thousands of Michiganians see their paychecks being cut or their jobs being eliminated.
 
“This lost business activity in Michigan will hurt business and industry, and it will force governors and state legislators to make increasingly difficult choices about state services,” Pollack said. “The Bush Administration’s decision is ill-timed and ill-considered, and it should be reversed by Congress.”

“The Medicaid cuts proposed by the Bush Administration would create real hardships for those in Michigan who depend on these important programs,” U.S. Senator Carl Levin (D-MI) said today. “Children and individuals with disabilities, in particular, would bear the brunt of these irresponsible cuts, which would deprive Michigan of almost $3.9 billion over the next five years. I hope the Congress will reverse these cuts.”

“At a time when middle class families across our state are struggling, we should be improving access to health care, not eliminating resources,” U.S. Senator Debbie Stabenow (D-MI) said today. “Implementing these rules not only places the health of citizens in jeopardy, but it hurts the economy as well. That is why I will fight to ensure the Administration’s new regulations don’t go into effect.”

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 Michigan is based on the latest version of 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 Michigan,” Pollack said, “and whether Michigan 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 Michigan’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 Michigan’s economy, which will be dramatically weakened by these cuts.”

All 50 states are affected by the Medicaid rule changes, Pollack said. 

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Families USA is the national organization for health care consumers. It is nonprofit and nonpartisan and advocates for high-quality, affordable health care for all Americans.

1201 New York Avenue NW, Suite 1100 · Washington, DC 20005
202-628-3030 · Email: info@familiesusa.org · www.familiesusa.org