Conservative Plan to Transform Medicaid Would Hurt Families, Economy, and States

As we’ve highlighted earlier on this blog, slashing health care programs for low income families has become a very popular way for governors to fix state budgets. During a Congressional hearing on March 1st, Mississippi Governor Haley Barbour voiced support for an increasingly popular Republican proposal to convert Medicaid, the national state run health care program for low income families which is subsidized and regulated by the federal government, into a block grant program. This would give states full freedom to take federal government money without any obligation to keep people covered or maintain benefits.

Putting aside the question of whether it’s fair to balance budgets on the backs of the most vulnerable members of our society, this proposal is bad for the economy and bad for states.

The Center for American Progress has released a study estimating that a very similar Medicaid block grant proposal introduced to the House by Conservative Representative Paul Ryan would result in a loss of 3 million jobs to the US economy. Money spent to help underserved families and children get medical coverage is one of the most economically productive things government can do and by reducing Medicaid spending 3 millions jobs can expect to be lost. As a comparison, the financial collapse and resulting recession that began in 2008 cost the United States approximately 8 million jobs. So this proposal amounts to adding almost another ½ of a recession on top of the one we’re currently struggling to recover from.

This proposal also makes state government solely responsible to cover any unexpected increases in health care costs. According to the CBO, this would put ever increasing pressure on state budgets and would result in decreases in services offered or increases in taxes.

The Obama administration has also come out against this proposal. Recently the Administration’s head of Medicare and Medicaid said “I think we need to make sure that Medicaid beneficiaries get access to the kind of care that could really help them them, and I think we’ll be open to ideas, but block grants are not something [the administration would support.]”

-- CWA Health Care / Kaiser Health News / Center for American Progress / NPR / WonkRoom / Congressional Budget Office / The Hill