NUMC CEO: Medicaid A Prickly Issue In Stimulus Package

February 2, 2009 · The battle in Congress over an economic recovery bill boils down in large part to this question: Is it an economic stimulus, or just social spending?

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One very large portion of the bill more money for the Medicaid health program for the poor is clearly both.

Medicaid, funded by the federal government and the states, currently provides health insurance to an average of 58 million low-income Americans each month. Its enrollees are mostly children, the elderly and the disabled. And when the economy suffers, Medicaid rolls rise.

“When the unemployment rate goes up, more individuals lose their jobs and their job-based health coverage, and their incomes decline, which means that demand for Medicaid goes up,” said Robin Rudowitz, a principal policy analyst for the Kaiser Commission on Medicaid and the Uninsured.

That demand is rising even as state revenue is falling, because fewer people with jobs means less taxes being paid.

At least 46 states are facing budget shortfalls, according to the Center on Budget and Policy Priorities, a Washington, D.C.-based think tank.

Because most states must by law balance their budgets each year, a number of them have no choice except to cut their Medicaid programs, which for many states represents the largest or second-largest budget item.

That, in turn, ratchets up pressure on health care safety-net providers such as the Nassau Health Care Corp., which runs a public hospital, nursing home and five community health centers on Long Island, N.Y.

In just the past year, CEO Arthur Gianelli says, “we’ve seen a 15 percent increase in uncompensated care, a 19 percent increase in our bad debt percentage for our outpatient visits. Those are two very important indicators of the fact that people are hurting. People are losing their jobs, people are losing their health insurance, and they’re coming to our facility to make sure that they continue to get their health care.”

Without money from Medicaid, Gianelli couldn’t keep the doors open. “The reality is that Medicaid is critically important when times are bad. And we should never forget that,” he said.

With states strapped, both the House and Senate stimulus bills propose to give them $87 billion for Medicaid, most to be spent over the next two years.

That’s far more than the $20 billion Congress provided during the last economic downturn, in 2003. And Republicans say it’s far too much.

“State governments have been on a spending binge for the last five years,” said Sen. Jon Kyl (R-AZ) during a Senate Finance Committee meeting last week. “And the question is whether the federal government should bail out the states for this kind of activity or whether, like families who find themselves way over-leveraged, they conclude that they have to do something about it, rather than just looking to someone to bail them out to pay their operating expenses.”

While it’s true that giving states more money for Medicaid allows them to shift funds to other parts of their budget, the strings that come with the Medicaid funds require them to maintain current eligibility.

But Rudowitz of the Kaiser commission says it’s also true that money for Medicaid stimulates the economy. She and her colleagues discovered that when they studied how the states used the money Congress provided in 2003.

“Because the Medicaid program was up and running, it was very easy and fast to get the money to the states,” Rudowitz said.

“And in addition to helping states manage their budget situations and avoid deeper Medicaid cuts, we do know from a whole series of research that Medicaid is an important economic engine in state economies,” she said. “So Medicaid funding does filter through state economies to help support health care services and jobs in both the health care sector and other sectors of the economy.”

That’s certainly the case in Long Island, Gianelli said. Together, his hospital, nursing home and health centers employ nearly 4,000 people, making Nassau one of the largest employers in the community.

“So, to the extent that we’re financially viable, it means we can keep employing people, keep people in good jobs and make an important contribution to the economy,” Gianelli said.

Still, a larger share of the Medicaid money will go to states with the highest unemployment levels, which prompts complaints from senators from states who stand to get less.

That’s providing just one more level of complication for a bill that’s becoming rife with partisan strife.

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