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Saturday, October 17, 2009

Every $1 in Medicaid Cuts Costs Us $5

By Kim Posich
Executive Director, New Mexico Center on Law and Poverty
          As estimates of the state's budget deficit continue to rise this year, our elected officials are preparing to deal with the problem in this weekend's special legislative session. A growing contingent of legislators is talking about solutions that combine responsible cuts with raising state revenues in measured ways. But the solution being advanced by the state's leadership is to cut programs across the board by a certain percentage; the only question is what the percentage will be.
        Across-the-board cuts are relatively easy. They help avoid political squabbles. They do not require time-consuming analyses of the effects of different possible options. They do not require facing stakeholders whose programs have received proportionately higher cuts. They do not require sound reasoning behind specific cuts, because all the cuts can be explained simply as "necessary to meet the deficit."
        But across-the-board cuts are not what's best for New Mexico because not all programs are equally important. The functions they perform are not equally urgent or vital. They don't contribute to the state economy equally. And they don't serve the same number of people. Thus an equal percentage cut to all programs is more than a little simplistic.
        The governor has recognized this by refusing to cut the public school budget. But he does not go far enough. There is another program in New Mexico that is especially vital. In fact, there may be no other program that serves so many New Mexicans with such essential services, while at the same time creating as many jobs and bringing in as much out-of-state money as does Medicaid.
        Medicaid provides health care to a very large percentage of New Mexicans, covering one out of every four of us. Because the great majority of Medicaid recipients are children of low-income families and people with disabilities, the services the program provides are of critical importance. Cutting Medicaid will impact the quarter of New Mexicans who depend on its health care coverage, and they will be those who can least afford such a blow. And every New Mexican will feel the effects when their private insurance premiums are raised to meet the resulting demands of covering the uninsured.
        Cuts to Medicaid will only serve to slow down our economic recovery and cause widespread job loss. In fiscal 2007, Medicaid brought over $2 billion into New Mexico from out of state. New Mexico's investment in the program that year, combined with the federal match, created an estimated $3.36 billion in economic activity, including $1.53 billion in wages and salaries, and more than 43,600 jobs for New Mexicans. Because every state dollar invested in Medicaid is currently matched 4 to 1 by the federal government, every $1 cut in state funds for Medicaid really means a $5 cut to the state economy, not including the negative ripple effect in business and economic activity.
        No, not all programs are equal and not all cuts will affect New Mexico equally. This weekend, New Mexico's leaders should take the difficult stance of distinguishing between programs and maintain funding for Medicaid.