Critical Issues for the States

Featured Articles

Ku L, Rothbaum E. Many States Are Considering Medicaid Cutbacks in the Midst of The Economic Downturn. Center on Budget and Policy Priorities. 2001 October 24. Available at www.cbpp.org/10-24-01health.htm.
A growing number of states are considering large budget reductions in their Medicaid programs because of the budget shortfalls they are experiencing as a result of the economic slowdown. Since all states except Vermont are required to balance their budgets each year, states in fiscal distress generally must contemplate raising taxes, lowering expenditures or adopting some combination of such policies. Medicaid - a large and growing component of most state budgets - is a prime target for budget reductions. This paper examines Medicaid reductions being actively considered in more than a dozen states.

National Governors Association. An Increase in the Medicaid FMAP: A Proposal to Both Stimulate the Economy and Provide Health Care for Low-Income Individuals. National Governors Association. Concept Paper. 2001 November 7. Available at www.nga.org/cda/files/110801MEDIFMAP.pdf.
Nearly all states are required to balance their budgets under state laws or constitutions, even during recessions. Yet, because of the economic downturn, state revenues are declining significantly and demand for state social services is rising as people lose their jobs. As a result, states will have no choice but to cut spending or raise taxes when such actions would further dampen economic activity and undercut efforts to stimulate the economy. An increase in the federal medical assistance percentage (FMAP) for states would address this problem. It would provide immediate fiscal relief to states, lessening the scope and depth of budget cuts and tax increases and minimizing the negative impact on the economy. State fiscal relief is one of the best ways to stimulate the economy because federal dollars used for this purpose avert state budget cuts and tax increases that would be injurious to the economy. It also would ensure that states receive funs to help compensate for the more than 4 million increase in the Medicaid rolls as unemployment continues to increase.

For Further Reference

Dubay l, Kenney G. Covering Parents Through Medicaid and SCHIP: Potential Benefits to Low-Income Parents and Children. Background Report prepared for Kaiser Commission on Medicaid and the Uninsured. The Henry J. Kaiser Family Foundation. October 2001.

Kaiser Commission on Medicaid and the Uninsured. The Role of Medicaid in State Budgets. The Henry J. Kaiser Family Foundation. Policy Brief: October 2001.

Kaiser Commission on Medicaid and the Uninsured. Medicaid and State Budgets: An October 2001 Update. The Henry J. Kaiser Family Foundation. October 2001.

Kaiser Commission on Medicaid and the Uninsured. COBRA Coverage for Low-Income Unemployed Workers. The Henry J. Kaiser Family Foundation. October 2001.

Kaiser Commission on Medicaid and the Uninsured. Issues Related to Unspent S-CHIP Money. The Henry J. Kaiser Family Foundation. October 2001.

Park E, Ku L. Administration Medicaid and SCHIP Waiver Policy Encourages States to Scale Back Benefits Significantly and Increase Cost-Sharing for Low-Income Beneficiaries. Center on Budget and Policy Priorities. August 15, 2001. Available at www.centeronbudget.org/8-15-01health.htm.

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