State and federal governments better be fixin’ to do some fixing

Dan Anderson

As we witnessed earlier this fall with the wild gyrations of the stock market, the only thing worse than bad news is more bad news. I guess it’s the financial equivalent of kicking someone when they’re down.

It’s against that backdrop that the Kaiser Family Foundation released a study of Medicaid enrollment for 2008, and predictions for 2009 and beyond. State budgets are strapped. Jobs have been shed like warm coats in the spring. Confidence in a quick rebound is nil.

By the time you read this, we will have elected a new president. (OK, as I write this, the candidates are polling about even and there are already accusations of ballot tampering, so anything is possible. Heck, in 2000, we didn’t get a decision until December 12, and that was via the Supreme Court. But I digress.) Neither has come out with a concrete plan for fixing—or fixin’, depending on your political preference—things.

In one of the scripted comedy shows that pretended to be a debate, one of the moderators asked both candidates to rank three major issues in the order they would address them: health care, energy, and entitlement reform. It came as no surprise to me that neither candidate really answered the question.

But answer it they must, and the Kaiser study gives a grim explanation why, even though Medicaid is a state entitlement, not federal.

Medicaid spending rose 5.3% nationwide in fiscal 2008, according to the Kaiser Foundation. Enrollment increased 2.1%. But this data was collected when things were still pretty good, all things considered. As Diane Rowland, executive vice president of the Foundation, told CQHealthBeat on September 29, "I think we have a somewhat rosier picture [in the survey] than the reality we’ve heard from the directors on the ground."

Kaiser’s survey found that in Fiscal 2009, Medicaid enrollment is projected to increase by 2.5% and state spending by 5.8%. But again, this is information collected before Lehman Brothers and AIG became water cooler chatter; before five banks, including Washington Mutual, failed (10 others already had in 2008 alone); before another 159,000 people joined the 600,000 who already lost their jobs in 2008.

All of this has put a big strain on personal finances, and for those who can’t make the difference between their bills and their income, they’ll be turning to the states for assistance.

Kaiser noted that a 1% increase in unemployment translates to 1 million people being added to Medicaid and SCHIP, an increase of $3.4 billion in combined state and federal Medicaid spending.

In California, for example, where Governor Arnold Schwarzenegger has been unable to deliver on his bilious campaign promises of a more prosperous state with lots of jobs, he may need to bum $7 billion from the feds to save several thousand state jobs and keep several key programs—like Medi-Cal, the state’s Medicaid system—from imploding.

The real fallout from the financial market’s meltdown won’t be felt for months yet. Let’s hope that by then the president, whoever he is, has moved beyond campaign rhetoric and delivered a clear plan to turn things around. This generation’s New Deal will be the only thing preventing states and their citizens, from getting a raw deal.

Dan Anderson
Editorial Director