Stimulus Watch: Increasing Medicaid Reimbursement Percentages

New Labor Department data indicate that U.S. companies cut 240,000 jobs in October, bringing the nation’s unemployment rate to 6.5 percent, the highest since March 1994:

Since August, the economy has lost 651,000 jobs — more than three times as many were lost from May to July. So far, 1.2 million jobs have been lost this year.

“The latest signs of distress seemed certain to inject more urgency into the debate over another round of government stimulus to spur spending,” the New York Times reports. “Democratic leaders in the House suggested this week that they might seek swift passage of $60 billion worth of measures that would extend unemployment benefits and food stamps, while aiding states whose tax revenues have plummeted.”

The point is this: a 1 percent increase in unemployment results in 1 million more people enrolling in Medicaid and SCHIP and another 1.1 million more people becoming uninsured. If the downturn economy requires government assistance, then helping states afford Medicaid sounds like a good place to start.

Brian Rosman is suggesting that the stimulus bill should also include an increase in the percentage the federal government reimburses states for Medicaid expenditures. As Rosman explains, “it’s based on a sliding scale, with the richer states, like Massachusetts, getting the minimum reimbursement, 50%… States like West Virgina and and Mississippi get around 75 cents back.”

Easing the pressure on state budgets to prevent states from cutting back Medicaid eligibility rules makes sense in the context of a souring economy and massive job losses. In fact, state governments and average Americans are both struggling to to keep up with increasing health care costs. Currently, at least 27 states are facing budget gaps and some have already slashed safety-net programs (Medicaid consumes an average 17 percent of state budgets).

Simultaneously “about 80 percent of Americans say they fear the ongoing global financial meltdown might affect their ability to pay their medical bills” and 47 percent of the public “reports someone in their family skipping pills, postponing or cutting back on medical care that they needed in the past year due to the cost of care.”