The Medicaid funding has been a sticking point for some of the self-styled “moderates” in the Senate, who seem to think that cutting a bill’s economy-boosting potential is the height of moderation. Sen. Susan Collins (R-ME), for instance, “has twice voted against procedural motions on the tax extenders bill because of their cost.” “That’s been my No. 1 concern,” she said. “I’d like to help [the states], but we can’t afford it,” added Sen. George Voinovich (R-OH).
Senate Minority Whip Jon KyL (R-AZ) said that “he thought at least some cut in the Medicaid aid would be necessary to get the bill to pass.” But as The Atlantic’s Derek Thompson pointed out, the instinct on the part of lawmakers to cut state aid is all wrong on the economics:
The instinct to wean is understandable, but the timing is troublesome. Take New Jersey, where Gov. Chris Christie has proposed to cut $11 billion (that’s 25%!) of the state budget for its fiscal year 2011, which begins in two weeks. The states are looking to the federal government to determine how much money they’ll need to allocate toward Medicaid and education. If [it cuts] our new Medicaid crutch in half, the states’ Medicaid burden grows and in a zero-sum budget, that means something else goes.
Thompson pointed to a Center on Budget and Policy Priorities report stating that “without the extended Medicaid funding, Pennsylvania plans to cut funding for domestic violence prevention in half, eliminate all state funds for addressing substance abuse and homelessness, cut funding for child welfare by one-quarter, and cut payments to private hospitals, nursing homes, and doctors across the state — among other steps.” But Pennsylvania is not the only state that will have to take dramatic steps if Congress doesn’t act.
Arizona would have to cut funding for its state court system, Colorado’s likely cuts “include eliminating state aid for full-day kindergarten for 35,000 children, eliminating preschool aid for 21,000 children, and increasing overcrowding in juvenile detention facilities,” while New Mexico “could eliminate a wide range of Medicaid services, including emergency hospital services, inpatient psychiatric care, personal care assistance for the disabled, prescribed medications, and hospice care.”
Mark Zandi, chief economist of Moody’s Economy.com, estimated that 200,000 jobs could be at stake in this debate over Medicaid funding. “If state governments don’t get additional help from the federal government in the coming fiscal year, then the job losses will be at least that large — in all likelihood, measurably larger than that,” Zandi said.