Proposed Medicaid Cuts Would Cost Jobs, Harm Economies of Every State

Large States Like New York Could See as Many as 190,000 Jobs at Risk; Even Wyoming, State with Smallest Potential Loss, Could Lose Nearly 2,000 Jobs

Washington, D.C.—The Medicaid cuts in the House Republican budget proposal, if implemented today, would have a devastating impact on the struggling economy of every state in the nation, putting hundreds of thousands of jobs and billions of dollars of economic activity at risk. That’s the conclusion of a national report released today by the national health care consumer organization Families USA.

Titled “Jobs at Risk: Federal Medicaid Cuts Would Harm State Economies,” the report focuses mainly on how Medicaid cuts would damage every state’s economy, although the report makes clear that the human toll of such cuts is far wider, affecting the health and well-being of low-income and middle-class families, children, seniors, and people with disabilities.

“Every federal Medicaid dollar that flows into a state stimulates business activity and generates jobs,” Ron Pollack, Executive Director of Families USA, said today. “Conversely—and tragically, for every state—cutting Medicaid funds not only hurts the seniors, people with disabilities, and children who count on the program as their lifeline, but it also results in fewer jobs and stunts the economic recovery.”

The budget proposal adopted by the U.S. House of Representatives, sponsored by Rep. Paul Ryan (R-WI), calls for cuts in federal funding to current state Medicaid programs of 5 percent in 2013, 15 percent in 2014, and 33 percent in 2021.

The report looks at the economic impact of a 5 percent, 15 percent, and 33 percent cut to Medicaid today. The following are some of the effects of implementing a 5 percent cut in Medicaid spending:

• The 50 states and District of Columbia would lose $13.75 billion needed to support health care for vulnerable residents, including funding for nursing home care and other long-term care services for seniors and people with disabilities.

• Among the five states facing the largest potential loss of business activity and jobs are New York ($3.8 billion, 28,830 jobs), California ($3.7 billion, 28,440 jobs), Texas ($2.1 billion, 18,160 jobs), Pennsylvania ($1.5 billion, 12,230 jobs), and Florida ($1.2 billion, 11,320 jobs). A 5 percent cut in federal Medicaid spending would mean a potential loss of business activity and jobs for even the two states with the smallest Medicaid budgets, North Dakota ($36.1 million, 410 jobs) and Wyoming ($30.7 million, 300 jobs).

A 15 percent cut in federal Medicaid spending in 2011 would have a greater impact.

• The 50 states and District of Columbia would lose $41.25 billion needed to support health care for vulnerable residents.

• The five states facing the largest potential loss of business activity and jobs are, New York ($11.4 billion, 86,480 jobs), California ($11.1 billion, 85,320 jobs), Texas ($6.4 billion, 54,490 jobs), Pennsylvania ($4.5 billion, 36,700), and Florida ($3.7 billion, 33,970 jobs). The two states with the smallest Medicaid budgets facing a potential loss of business activity and jobs are North Dakota ($108.2 million, 1,230 jobs) and Wyoming ($92.1 million, 900 jobs).

Here are examples of the impact of a 33 percent cut in federal Medicaid spending in 2011:

• The 50 states and District of Columbia would lose nearly $90.75 billion needed to support health care for vulnerable residents.

• The five states facing the largest potential loss of business activity and jobs would be, again, New York ($25.1 billion, 190,260 jobs), California ($24.4 billion, 187,690 jobs), Texas ($14.2 billion, 119,890 jobs), Pennsylvania ($9.9 billion, 80,750), and Florida ($8.1 billion, 74,740 jobs). The impact of a 33 percent cut on the two states with the smallest Medicaid budgets in potential business activity and job loss: North Dakota ($238.0 million, 2,710 jobs) and Wyoming ($202.7 million, 1,980 jobs).

“Medicaid is good medicine for seniors and people with disabilities needing nursing home and other long-term care, as well as children who need to see a doctor,” said Pollack. “It is also good medicine for state economies and job growth.

“This is exactly the wrong time for Congress to cut a program that boosts the economy while also providing a boost to individuals and families facing hard economic times.” 

The Families USA “Jobs at Risk: Federal Medicaid Cuts Would Harm State Economies” report 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. In preparing this report, Families USA worked closely with Richard Clinch, Director of Economic Research at the Jacob France Institute of the Merrick School of Business at the University of Baltimore.

Families USA has created an online calculator that yields instant results on what Medicaid cuts at the state or federal level mean for each state in terms of potential lost jobs or business activity.

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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