New York Times, May 1, 2008: Even Less Help in Hard Times

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The troubled economy could soon create a major fiscal crisis for the state-run Medicaid and children۪s health programs that would only be exacerbated by the Bush administration۪s efforts to cut these programs back. Congress must provide temporary aid to the most beleaguered states and find a permanent way to protect Medicaid and children۪s health programs from wrenching cuts every time a recession hits.

The problem was laid bare in a report this week from the Urban Institute, funded by the Kaiser Family Foundation. Researchers estimated that each percentage-point rise in the unemployment rate would increase Medicaid and children۪s health enrollments by one million people as more families fall into poverty. And it was estimated that it would drive another 1.1 million people into the ranks of the uninsured as they lose their employer-sponsored coverage.

This will happen at a time when state governments are ill prepared to cope because their tax revenues are plunging during the economic downturn. By one count, 27 states and the District of Columbia are forecasting some $40 billion in budget deficits for the coming year.

Many states will have little choice but to shrink their Medicaid and children۪s health programs, along with other state services, to meet legal requirements that their budgets be balanced. At least 13 states have already proposed such cuts or begun to implement them.

A recent poll by the Kaiser foundation found that nearly 3 in 10 respondents already have a serious problem paying for health care or health insurance. Nearly a quarter have switched or stuck with a job primarily because of health benefits, and a significant number said that they or someone in their family had decided to marry in the past year mainly to gain coverage for a spouse.

In the last downturn, earlier in this decade, the federal government provided some $20 billion in fiscal relief to the states, including $10 billion in increased matching funds for Medicaid. But this time, the Bush administration has imposed new rules that would impede expansion of the children۪s health program and new regulations that would reduce federal funding for Medicaid by anywhere from $14 billion (the administration۪s estimate) to $50 billion (the states۪ estimate) over the next five years.

This is a terrible time to reduce funding for safety-net programs. Congress needs to place a moratorium on the Medicaid regulations by a veto-proof margin and find a way to overturn the children۪s health rules. As a permanent remedy, Congress should restructure Medicaid and children۪s health programs so that federal financing increases during bad economic times when people most need their government۪s help.

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