Medicaid crisis looms

Sara Rosenbaum, professor of health policy, said at a briefing organized by the Alliance for Health Policy, “You really cannot talk about health equity without talking about the Medicaid program in the middle of a pandemic: this is the biggest public health first responder we have.”Medicaid, a program that provides health insurance for the poorest people in the US, is jointly paid for by the federal government and the states. And throughout the country Medicaid is threatened, Rosenbaum warned.Huge cuts in Medicaid funding are likely in Democratic and Republican states, as social isolation has dramatically reduced the revenue that the states generally collect in sales, restaurant, and income taxes. States cannot, by law, operate at a deficit: if revenues decline, spending must be cut.

California faces a $54bn shortfall in revenue, Health Insurance Quotes  almost 37% of its current general budget. Despite the large federal role, Medicaid is in many instances “the largest budget item for states” and thus a tempting target for making cuts, says Tom Betlach, a partner in the Speire Healthcare Strategies consultancy.As an example he uses Arizona, where he used to administer the Medicaid program. Under the pre-pandemic formula, with a federal match, says Betlach, “To get $33m in state savings, we had to cut $100m out of the delivery system.” But, with the feds picking up a higher percentage of spending, cutting $33m from the state contribution will also reduce the federal share and result in a decrease to Medicaid spending in Arizona of around $135m in total funds.Democrats in the House of Representatives are seeking to further increase the federal contribution to Medicaid, but the Republican controlled Senate is taking more of a wait-and-see attitude on additional spending. This impasse is not likely to be resolved until September at the earliest, when Congress returns from its summer recess.

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