From Crunch to Crisis: State Budgets, Medicaid and the Economy

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From Crunch to Crisis State Budgets, Medicaid
and the Economy

• Robin Rudowitz
• Associate Director
• Kaiser Commission on Medicaid and the Uninsured
• for
• Alliance for Health Reform
• Washington, DC
• February 22, 2010

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Medicaid Today
Health Insurance Coverage 29.5 million children
15 million adults in low-income families 14
million elderly and persons with disabilities
Assistance to Medicare Beneficiaries 8.8
million aged and disabled 19 of Medicare
beneficiaries
Long-Term Care Assistance 1 million nursing home
residents 2.8 million community-based residents
MEDICAID
State Capacity for Health Coverage Federal share
ranges 50 to 76 42 of all federal funds to
states
Support for Health Care System and Safety-net 16
of national health spending 41 of long-term
care services
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States with Unemployment Rates At Various Levels
in December 2008 and December 2009
Number of States
Unemployment Rate
December 2009
December 2008
4
State Tax Revenue, 1999-2009
15.9
-11.0
-9.4
3 Quarters of Double Digit Revenue Loss in 2009
-15.6
SOURCE Percent change in quarterly state tax
revenue, US Census Bureau
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Impact of a 1 Point Increase in Unemployment on
State Revenues, Medicaid, CHIP Uninsured
1.1
1.0

1

Decrease in State Revenues
Increase in National Unemployment Rate
Increase in Medicaid and CHIP Enrollment (million)
Increase in Uninsured (million)
3-4
SOURCE John Holahan and Bowen Garrett, Rising
Unemployment, Medicaid, and the Uninsured,
prepared for the Kaiser Commission on Medicaid
and the Uninsured, January 2009.
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Trying to Respond ARRA Medicaid Provisions

• Temporary increase in Medicaid FMAP
• Estimated 87 billion in Federal Funds
• Relief for 10/1/08 12/31/10
• 3 Components
• Hold harmless
• Base increase 6.2
• Additional relief for states with high increases
  in unemployment
• States cannot restrict eligibility or standards
  and must comply with prompt pay requirement

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How States Used ARRA Enhanced Medicaid Funding in
FY 2009
SOURCE KCMU survey of Medicaid officials in 50
states and DC conducted by Health Management
Associates, September 2009.
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Medicaid is an Economic Engine in State Economies
State Medicaid Dollars
Federal Medicaid Matching Dollars
Injection of New
Money
Direct Effects
Health Care Services
Vendors (ex. Medical Supply Firm)
Indirect Effects
JOBS
Employee Income
Induced Effects
Consumer Goods and Services
Taxes
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Total Medicaid Spending and Enrollment Growth
By the end of 2009, 44 states said spending and
enrollment projections for FY 2010 were too low
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States Imposing Policy Restrictions SFY 2008-2010
Number of States
11
Outlook

• Budget pressures for states and individuals will
  persist even when the economy starts to recover
• States struggling to maintain current programs,
  but
• Cuts to providers and benefits on the table to
  meet mid-year shortfalls for FY 2010
• Expiration of the ARRA funds mid-way through
  state FY 2011 could result in deeper cuts to
  providers and benefits and eligibility cuts
• Budget driven cutbacks in Medicaid may jeopardize
  Medicaids role as a strong coverage program for
  low-income individuals