Huge Medicaid Cuts to Occur if Congress Fails to Extend Enhanced Federal Funding

Extending Enhanced Federal Medicaid Matching Funds for States Would Also Spur Economic Activity While Protecting and Creating Jobs

Washington, D.C.—An extension of increased federal matching funds to states for their Medicaid programs is needed quickly to avert huge cutbacks in Medicaid coverage and services across the country, according to a report issued today by the consumer health group Families USA.

Last year, Congress passed the American Recovery and Reinvestment Act (ARRA), which included $87 billion in increased federal funding for Medicaid. This relief, which helped prevent severe Medicaid cuts in state fiscal year 2010 budgets, is scheduled to end on December 31, 2010.

Since state budgets are mostly based on July 1-June 30 fiscal years, states are expected to enact major Medicaid cuts in the next few months if an extension of the enhanced funding is not enacted very soon. 

The new report documents a large number of significant cutbacks that are likely to occur, including the following: 

• Arizona is considering a proposal by its governor to eliminate Medicaid coverage for approximately 310,500 low-income adults.
  
  
• Governor Schwarzenegger has proposed cutbacks in California’s Medicaid program for children, pregnant women, and parents that would result in 250,000 low-income people losing their coverage.
   
• Florida is considering the elimination of Medicaid coverage for 19- and 20-year-olds while reducing coverage eligibility for pregnant women.
  
  
• Michigan’s governor has proposed continued elimination of several Medicaid services (e.g., dental, vision, podiatric) for adults, continued Medicaid provider rate reductions of 8 percent, and freezing enrollment in the Medicaid Home- and Community-Based Services Habilitation/Supports Waiver.
   
• Vermont’s governor is proposing to increase Medicaid premiums for low-income adults by nearly 70 percent.
  

“At the same time Congress is considering health reform that would ultimately extend health coverage to tens of millions of people, a more immediate crisis is looming that will cause many to join the ranks of the uninsured within the next year,” said Ron Pollack, Executive Director of Families USA.

“The only way this immediate crisis can be averted is by enacting an extension of increased federal funding for state Medicaid programs—and doing so right away,” said Pollack.

President Obama’s recently submitted proposed budget provides $25.5 billion in funding to extend by six months the additional federal Medicaid funding states have received since the ARRA was enacted. The House of Representatives has adopted such an extension in the jobs bill it approved one month ago.

If the President’s proposal is enacted, the states that would receive the largest increase in federal funding include New York ($3.478 billion), California ($3.071 billion), Texas ($1.697 billion), Pennsylvania ($1.164 billion), Florida ($1.105 billion), Ohio ($977 million), and Illinois ($941 million).

According to the Families USA report, the extension of increased federal funding for state Medicaid programs will also improve state economies while expanding and protecting jobs. The report projects that the new funding will result in the expansion or protection of hundreds of thousands of jobs, including 66,600 in California and 60,400 in New York, and will generate billions of dollars in increased wages and business activity.

The Families USA report analyzes the potential economic boost of the federal Medicaid funding increase through the use of the U.S. Department of Commerce RIMS II economic input-output model. The RIMS II model is widely used to analyze the economic impact on states of projects, events, and public program changes.

###

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