With all government budgets undergoing needed scrutiny, we must be particularly careful with any changes to Medicaid and other cost-effective programs. Here’s why, and why the issue is urgent.
Federal help for Medicaid is likely to be enacted as part of a federal economic stimulus package.
Maryland state lawmakers may also review our commitment to this program after the legislature convenes Jan. 14.
Medicaid is more than health insurance. The program brings federal dollars into the state, saves Marylanders from subsidizing higher health care bills in the future, and can even help stimulate the state economy.
Funding for Medicaid comes jointly from the federal and state government. Normally, for every dollar that Maryland contributes to this program, the federal government adds another dollar. New federal funding may make the program even more attractive to states, requiring only, say 80 cents from Maryland for a federal dollar. Details are currently under negotiation.
Medicaid became more important to Marylanders in 2008 when Gov. Martin O’Malley signed into law the Working Families and Small Business Health Care Coverage Act. Since July 1, more than 24,000 previously uninsured Marylanders have gained health care coverage.
Medicaid insurance can save Maryland taxpayers by reducing the burden we all bear of the escalating cost of hospitalization and emergency care for the uninsured. Because of cost shifting, estimates show each insured family pays an additional $1,000 annually to cover the uninsured. Securing people on Medicaid could actually reduce rising health care costs for employers, small businesses and others who buy health insurance.
Results from two other states show the promise of fiscal benefits.
In 2006, Massachusetts adopted a new law expanding health coverage to 440,000 more state residents. After two years, the cost of unpaid care at emergency rooms, hospitals and community health centers dropped by roughly 40 percent.
By contrast, Oregon cut 50,000 people from its Medicaid roles in 2003. The number of visits by uninsured residents to the emergency room rose from 6,682 per month in 2002 to 9,058 per month in 2004. After figuring in factors such as bad weather and holidays, researchers estimated that the reduction in Medicaid accounted for roughly a 20 percent rise in emergency room visits.
In other words, Medicaid can leverage federal money to prevent larger health problems from landing expensively on Maryland taxpayers. Of course, these federal dollars aren’t free to Maryland taxpayers, who pay federal taxes. But the federal government can borrow for this spending, unlike state governments. And federal borrowing rates are currently at historic lows. In challenging economic times, low-interest federal loans make sense.
Medicaid also means economic stimulus. Medicaid helps the economy because the funding dollar doesn’t stop with health care. The caregiver just reimbursed with Medicaid insurance may then purchase groceries, and the grocery clerk may use some of her wages to buy shoes, and so on. Figures from Families USA for Health Care for All Maryland explore the effect on the Maryland economy. The figures use a leading U.S. Senate proposal, co-sponsored by Sen. Barbara Mikulski, which calls for $631 million in additional federal support for Medicaid in Maryland. For Maryland’s economy, this would mean 9,500 new jobs and $1.1 billion worth of business activity. And it makes common sense that with preventive medicine from routine Medicaid-funded checkups, a healthier Maryland work force will be more productive. Finally, a special benefit is that increased Medicaid spending works immediately, with no lag for rule making or other administrative delays.
These are among the reasons congressional leaders and Barack Obama’s incoming administration view Medicaid as central to their stimulus package. Shovel-ready infrastructure projects may figure at the center of the Obama revitalization program, but these funds won’t enter the economic bloodstream as fast as increased federal Medicaid help.
Medicaid-as-stimulus is a proven tool. Congress approved an increase in the federal match during the downturn of 2003 as part of a successful economic jump-start. During this effort, no states made changes to Medicaid eligibility that would have disqualified them from receiving the new fiscal relief. That’s a clear testament that state decision makers understood the key role of Medicaid during the comparatively mild recession of 2003. Our more severe economic downtown correspondingly makes the many merits of Medicaid funding even more persuasive.
Dan Morhaim is a medical doctor and member of the House of Delegate from Owings Mills. Reach him at [email protected].
Vincent DeMarco is president of Maryland Citizen’s Health Initiative. Reach him at [email protected].
