Anticipating an influx of federal dollars for budget-squeezed states, a national health care foundation on Friday predicted that some $40 billion would be available to states’ Medicaid programs and the Children’s Health Insurance Program shortly after Barack Obama assumes the United States presidency next month.
Maine’s share would be about $228 million over the next two years, according to the report released by Families USA, a nonprofit organization for health care consumers. State offices were closed Friday because of the weather, but the head of a conservative Maine-based policy center cautioned that Maine’s Medicaid program, MaineCare, is unsustainable even in more flush economic times and should be downsized.
The proposed Medicaid increase is contained in an economic stimulus package recently introduced by Senate Majority Leader Harry Reid of Nevada. The same bill contains new funding for states’ infrastructure projects such as bridge and road repairs. If the stimulus package were approved, the federal government would boost its match to states’ Medicaid spending by 8 percent for the next two fiscal years. An average of about 43 cents of every Medicaid dollar now is paid by state budgets, and 57 cents is paid by the federal government.
The increase would help sustain and expand critical health care and social services for low-income, elderly and disabled Americans as well as those newly affected by the ailing national economy, according to Ron Pollack, executive director of Families USA. In addition, he said, it would help support job retention and growth in agencies that provide those services.
“Families across the nation are being battered economically during this recession, and they qualify in increasing numbers, through job losses and pay cuts, for the health safety programs like Medicaid and CHIP,” Pollack said. “Tragically, however, as Maine and other states struggle to balance their budgets, families in increasing numbers are seeing their benefits reduced and co-pays increased, and too many are being barred from safety-net health coverage.”
In addition to helping states meet the growing demand for Medicaid and CHIP, the proposed funding increase is expected to help create up to 4,300 new jobs in Maine with $143 million in new wages and to generate an estimated $380 million in new business activity, according to the report.
Maine is one of 43 states facing a budget deficit, and one of 19 that recently have cut, or proposed cutting, Medicaid spending to save money, the report states.
Maine has not proposed tightening general MaineCare eligibility standards as some states have. But it already has decreased benefits in some programs as part of the budget curtailments ordered by Gov. John Baldacci in November.
Additionally, because the state Department of Health and Human Services is charged with cutting $110 million in its coming two-year budget, a number of other changes are anticipated in the MaineCare budget proposal that will be presented to the Legislature in January. These include eliminating some services, reducing pay-ments to doctors and hospitals, and increasing the amount some enrollees must pay in the form of co-pays and deductibles.
Maine has one of the highest Medicaid participation rates of all the states, with about one of every five residents now enrolled. In addition, about 15,000 Maine children are covered under CHIP, which is available to families who make too much to qualify for MaineCare but not enough to afford private insurance.
Tarren Bragdon, executive director of the Maine Heritage Policy Center, said Friday that it is important to respond to the increasing demand on the state’s health care safety net related to the economic crisis, but he cautioned that MaineCare is already oversized.
“It’s not just a question of is MaineCare affordable during this economic downturn,” he said. “It wasn’t affordable when times were better.” Bragdon said the state must scale back eligibility, especially for young childless adults and the parents of young children.
MaineCare’s low reimbursement rates drive up the cost of health care for those who pay out of pocket or who have private insurance, Bragdon said, and he cautioned against the federal government’s approach of “borrowing unprecedented amounts of money” to stimulate the economy.
The proposed temporary funding increase is “one-time money” that should be spent on paying “one-time bills,” such as the millions of Medicaid dollars owed to Maine hospitals, Bragdon said, and not on startup programs such as Dirigo Health, funded in 2003 with a one-time Medicaid allocation of $53 million.
The full Families USA report, “A Painful Recession: States cut health safety net programs” is available online at www.familiesusa.org.