CHIP, Medicaid subsidies urged

If federal and state government leaders really want to stimulate the economy, they should be subsidizing Medicaid and the Children's Health Insurance Program instead of cutting them at the time they're needed most.

So concludes a new report by the national, nonpartisan consumer health organization Families USA that urges states in particular not to step over dollars to save dimes in trying to balance budgets during the recession.

The economy might be dictating cutbacks, but arithmetic shows if Medicaid and CHIP were included in the economic stimulus package likely to be awaiting action by the new president and Congress in January, Utah would receive $175 million in new funding, the report says. The ripple effect would be 3,600 new jobs, $120.6 million in additional wages and $335 million in new business activity in the state.

The report, "A Painful Recession: States Cut Health Safety Net Programs," spotlights the growing need for increasing the federal matching funds — known as the Federal Medicaid Matching Payments, or FMAP — in the Medicaid program.

Financially shoring up the joint state/federal insurance plan for the poor when more people are falling into the safety net is not only morally right, "an increase in federal Medicaid matching funds for Utah is a win-win proposition," Ron Pollack, executive director of Families USA, said last week. "It would enable Utah to meet the growing health-care needs of its families while providing a major boost to the state's economy."

The Families USA analysis is based on legislation introduced in the Senate by Senate Majority Leader Harry Reid, which would provide close to $40 billion in temporary, additional federal funding for state Medicaid programs. Similar proposals have been developed by the National Governors Association and President-elect Barack Obama's transition team.

Gov. Jon Huntsman Jr.'s proposed 2010 budget spares Medicaid from 7 percent government agency cutbacks, but legislators, who will begin drafting their own budget proposal come January, are saying balancing the state budget in light of continuing revenue shortfalls will mean cutbacks of around 15 percent, and that they simply won't be able to afford to not make cuts in Medicaid.

Local advocates for Utahns on Medicaid and CHIP have been urging lawmakers to avoid knee-jerk cutbacks, if for no other reason than every dollar cut means about a $3 loss in federal matching money.