3 cash-strapped states are making deep cuts to Medicaid as coronavirus devastates their budgets — and millions of jobless people lack health insurance

Ohio Governor Mike DeWine AP Photo/Paul Vernon, File
  • Three states are scaling back their Medicaid spending as demand for the health insurance program grows with the tidal wave of layoffs causing workers to lose their health insurance.
  • Ohio, Colorado, and Georgia announced deep cuts to their programs.
  • Officials are calling for federal aid to states and a boost to the government’s share of Medicaid spending.
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Three states are moving to slash their Medicaid budgets as they struggle to shore up plummeting tax revenues and a surge of unemployed people lacking health insurance, according to Politico.

Republican Gov. Mike DeWine of Ohio announced on Tuesday the state would cut $US210 million in Medicaid spending over the next two months. Colorado and Georgia are also taking similar steps.

“The cruel nature of the economic downturn is that at a time when you need a social safety net is also the time when government revenues shrink,” DeWine said at the press conference.

In Georgia, Republican Gov. Brian Kemp ordered state agencies to scale back spending by 14%, even as demand for safety net programs grows. Colorado Gov. Jared Polis, a Democrat, is also cutting Medicaid spending by $US229 million.

Over 30 million people filed for unemployment in the past two months, and the pandemic has slammed the key sources of state revenue that help fund Medicaid: sales and income taxes. The federal government pays around 60% of the program’s costs on average, per the Kaiser Family Foundation, and states finance the rest.

State officials are warning they will have to make painful cuts to the health insurance program for low-income people unless there’s a massive infusion of federal aid.

The surge in unemployment is also causing a spike in the number of uninsured Americans. The Robert Wood Johnson Foundation projected that between 25 million and 43 million people could lose their employer-sponsored health insurance as a result of the pandemic. There could be up to 23 million additional signups for Medicaid.

Nine states so far have reported an increase in the number of Medicaid applications, according to the Centre on Budget and Policy Priorities.

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Reliance on Medicaid has grown since the last recession over a decade ago, as the Affordable Care Act encouraged its expansion to cover more low-income people. State spending on the program averaged around 19.7% in fiscal 2019, compared to 15.7% in fiscal 2009, per the National Association of State Budget Officers.

A bipartisan group of former Medicaid chiefs called on Congress to cover the full cost of expanding Medicaid in 14 states that didn’t do so under Obamacare.

“This would encourage ‘non-expansion’ states to expand eligibility, at least temporarily, for Medicaid to cover currently uninsured people during the pandemic,” they wrote in a USA Today op-ed published Wednesday.

Democrats are pushing for a federal lifeline to embattled states weathering severe pressures on their budgets, a proposal that has encountered resistance from President Trump and other Republicans. Under the Cares Act, the federal government temporarily boosted its share of Medicaid spending by 6%.