With over half of U.S. states predicting budget deficits for the coming fiscal year, Medicaid and state versions of the State Children's Health Insurance Program are facing fiscal pressure as increased unemployment and decreased wages lead more people to enroll in government-sponsored health care programs, according to a Kaiser Family Foundation Commission on Medicaid and the Uninsured study released Tuesday, the New York Times reports (Sack, New York Times, 4/29).
The report, conducted by researchers at the Urban Institute's Health Policy Center, examined the effect that a one-percentage-point rise in the national unemployment rate would have on state Medicaid and SCHIP programs (Francis, "Health Blog," Wall Street Journal, 4/28).
Findings
The analysis projects that for every percentage-point increase in unemployment:
- The number of uninsured in the U.S. would increase by 1.1 million;
- Medicaid and SCHIP enrollment would increase by 600,000 children and by 400,000 adults;
- Enrollment jumps in Medicaid and SCHIP would cost an additional $3.4 billion, of which $1.4 billion would come from the states; and
- State general fund revenues would drop by 3% to 4%, likely leading to cuts in Medicaid and SCHIP programs.
Context of Report
According to the researchers, "Because of state balanced-budget requirements, Medicaid and other assistance is most likely to be cut when state residents have the greatest need for help."
A survey found that 27 states and Washington, D.C., are forecasting budget deficits for fiscal year 2009, and cuts to Medicaid or SCHIP programs have been proposed in 13 states.
Meanwhile, the unemployment rate has increased by seven-tenths of 1% since March 2007.
According to Urban Institute Director of Health Policy John Holahan, job losses often accelerate late in a recessionary cycle, meaning the "heaviest hit is still likely to come." Holahan said the projections would be in addition to the enrollment growth normally expected from increasing health insurance costs and the erosion of employer-sponsored coverage.
Researchers also said that the impact of the current economic downturn might be worsened by its proximity to the recession in 2001. "You could have more people at the tipping point so we could be underestimating things a little bit," Holahan said (New York Times, 4/29).
Researchers said the federal government could increase all Medicaid funds temporarily; target federal spending increases to specific states based on need; or allocate funds discriminatingly to states meeting certain criteria, either for a limited time or with a formula that would be implemented during future economic downturns ("Health Blog," Wall Street Journal, 4/28).