Earlier today, Families USA released a short report about the proposed Medicaid rule changes put in place by the Bush Administration. They are projected to cost California more than $10.8 billion in federal funds over the next five years.
The report suggests that the cut in federal funding will, in fact, act like a giant anti-stimulus package. Those lost Medicaid funds will eliminate an estimated 46,700 jobs and an accompanying $1.9 billion in wages, and, even worse, cost the state an estimated $5.4 billion in lost business activity.
Virtually all that economic pain comes in the first year of implementation, when California would fail to receive approximately $2.2 billion in Medicaid payments. Titled “Bad Medicine,” the report analyzed the economic impact of seven new Medicaid regulations that were issued in 2007.
“The devastation caused by the Administration’s cuts will affect millions of people who rely on Medicaid for their health lifeline. This will be tragic for their families,” Ron Pollack, Executive Director of Families USA, said today.
“Additionally, these cuts will harm state budgets at the worst possible time. These cuts in federal Medicaid payments will have a ripple effect through state economies that are already struggling during this economic downturn. This economic harm will increase the number of people who may need Medicaid, as tens of thousands of Californians see their paychecks being cut or their jobs being eliminated.
“This lost business activity in California will hurt business and industry, and it will force governors and state legislators to make increasingly difficult choices about providing state services,” Pollack said. “This Bush Administration’s decision is ill-timed and ill-considered, and it should be reversed by Congress.”
There was also comments from our state’s Medicaid director.
“The proposed changes to the Medicaid program would result in a significant and potentially devastating shift of costs to California taxpayers,” Stan Rosenstein, chief deputy director, California Department of Health Care Services, said today. “Our state would be saddled with an estimated $12 billion financial burden resulting from such a drastic change in how the federal government supports the Medicaid program. The Governor strongly believes that such changes should undergo further evaluation and a full congressional review before being implemented.”
The seven regulation changes issued by the Bush Administration in 2007 – and imposed on states without congressional review or debate – restrict funding for a variety of Medicaid services, including rehabilitation services, school-based transportation, as well as Medicaid administrative services, such as outreach, enrollment, and case management. The seven rule changes are now either under a congressional moratorium or awaiting implementation.
Just a comment: On top of proposed cuts at the state level, these federal cuts by the Bush Administration would be a 1-2 punch for California patients, our health system, and our economy. These cuts would add fuel to the fire of our deteriorating economy, and our deteriorating health system, one that we all rely on.
We are happy that most (but not all) of our California Congressional delegation voted to delay these regulations, as Hanh reported below. These is the exact wrong direction for California and for health care.