An analysis conducted for the Kaiser Family Foundation's Commission on Medicaid and the Uninsured, "Medicaid, SCHIP and Economic Downturn: Policy Challenges and Policy Responses," projects the implications of a downturn for health coverage and state programs.
With more than half of states forecasting budget deficits for the coming fiscal year, Medicaid and the State Children's Health Insurance Program (SCHIP) are facing fiscal pressure at the same time that income and job losses are causing more people to seek enrollment in these programs, according to the analysis.
The analysis finds that for every 1-percent increase in the national unemployment rate:
- the number of uninsured in the country would grow by 1.1 million;
- Medicaid and SCHIP enrollment would increase by one million (600,000 children and 400,000 non-elderly adults);
- the enrollment increase in Medicaid and SCHIP would lead to $3.4 billion more in spending, of which $1.4 billion would be states' obligation;
- State General Fund revenue would drop by 3 percent to 4 percent, leading to state budget cuts - with Medicaid spending a likely target, since it's a substantial segment of state budgets.
States are looking for fiscal relief from the federal government as well as seeking a moratorium on federal regulations that would reduce Medicaid funding for states from Congress, according to reports.
The analysis documents how federal fiscal relief during the last economic downturn, in 2003-2004, helped stabilize Medicaid eligibility and let states avoid deeper budget cuts. The authors lay out three options that policymakers could consider in providing federal assistance for state health coverage programs when the economy slumps.
KCMU also released the brief, "Medicaid in a Declining Economy: Limited Approaches for States to Control Spending," which analyzes results from its annual 50-state budget surveys of Medicaid directors from 2003 to 2007.
The brief contends that, with another economic downturn coming so quickly after the last one, states may have fewer policy options to control spending this time because many of the levers to make Medicaid programs more efficient have already been implemented. Cuts in eligibility or benefits may be more likely during this downturn.