06/28/2011 12:08 pm ET Updated Aug 28, 2011

Proposed Budget Cuts To Medicaid Could Kill Jobs And Short-Change Seniors

WASHINGTON -- While the debate over entitlements is focusing on cuts to Social Security and Medicare, Senate Democrats worry that the closed-door debt-ceiling talks could instead lead to major cuts to Medicaid at a time when the joint federal-state program is under assault from cash-strapped states hoping to close budget gaps.

Sen. Jay Rockefeller (D-W.Va.) has organized more than 40 Democrats into a bloc committed to opposing cuts to Medicaid. "I can see just a feast of people who have no idea what Medicaid does and who don't care, because Medicaid people don't vote, they don't give money, they don't have lobbyists," he told HuffPost. "But it serves 68 million Americans, including all of the disabled, certain women and children, and all kinds of other things, and obviously the poor. But there's a lot of people around here who don't have any interest in the poor." Rockefeller lobbied the White House on Wednesday not to cut Medicaid.

House Republicans are pushing for dramatic cuts. The House Republican budget proposal, sponsored by Rep. Paul Ryan (R-Wisc.), calls for a 5 percent cut in federal funding to state Medicaid programs in 2013, 15 percent in 2014, and 35 percent by 2021. The cuts would add up to about $750 billion over ten years, 64 percent of which would go to senior nursing home residents who depend on Medicaid to pay for their housing and assistance. Another 22 percent of the Medicaid budget is allocated to 34 million very poor children.

“Now I ask you, how could you possibly cut 35 percent of that [Medicaid] budget and not hurt hundreds of thousands, if not millions of families who are dealing with a parent or a grandparent in a nursing home, or a child with serious disabilities?” Gene Sperling, director of the National Economic Council, recently told the Peterson Institute fiscal summit. “How is the math possible? If you tried to protect [the seniors] mathematically, you would have to eliminate coverage for all 34 million children.”

Even Sen. Kent Conrad (D-N.D.), the chairman of the Budget Committee who is pushing debt-ceiling negotiators to cut at least $4 trillion over the next decade, told HuffPost that Medicaid's slim overhead means cuts to the program would hit beneficiaries quickly. A cut to Medicaid "goes right to medical services."

The cuts could also have a devastating effect on the economies of many cash-strapped states, according a series of state-by-state analyses conducted by nonprofit health advocacy group Families USA.

In Michigan, for instance, the first tier of House Republican Medicaid cuts--which add up to a loss of almost $400 million in federal Medicaid dollars--could cost the state 7,670 jobs and put at risk almost $861.9 million in business activity. By 2021, the proposed cuts would cost Michigan more than 50,000 jobs and $5.7 billion in business activity.

The forecast is worse in Ohio: If federal Medicaid funding is cut by 33 percent, the state will lose nearly 75,000 jobs by 2021, according to the report.

“Medicaid is good medicine for seniors and people with disabilities needing nursing home and other long-term care, as well as children who need to see a doctor,” said Ron Pollack, executive director of Families USA. “It is also good medicine for state economies and job growth. This is exactly the wrong time for Congress to cut a program that boosts the economy while also providing a boost to individuals and families facing hard economic times.”

As an alternative to Ryan’s proposal, the Obama Administration has proposed its own set of cuts to Medicaid that would shift a significant portion of Medicaid and CHIP (Children’s Health Insurance Program) costs to the states. The plan would replace the current system, which is a series of rates by which the federal government reimburses states for patients’ Medicaid costs, with a single, lower "blended" rate for each state.

A White House official told HuffPost that the blended payment plan is intended to make Medicaid simpler and more efficient, thus reducing costs for the government. But the problem with the proposal, according to the Center on Budget and Policy Priorities, is that it could prompt states to cut benefits and tighten eligibility requirements for children, people with disabilities, and seniors, an assertion the White House official disputed. States might also cut reimbursement rates to hospitals and physicians, the report says, which would make it hard for people to access the health providers they need.

Further, the CBPP predicts that the proposal could reduce states’ incentive to enroll newly eligible people in the Medicaid and CHIP programs. Under the current system, the federal government picks up nearly all of the tab for a new patient’s first few years of enrollment in Medicaid and 90 percent of the costs over the long run. But under the blended-rate plan, states would have to cover a much higher share of those initial costs, which could dampen their efforts to insure people.

If the White House plan would nick Medicaid recipients, the House Republican plan would leave a deep gash. “Clearly the Ryan budget would have much more damaging effects on states, beneficiaries and health providers, but that’s not to say this proposal is so much better,” said Edwin Park, the author of the CBPP report. “It has its own problems.”

Ryan’s budget plan is deeply unpopular: A recent poll by Anzalone Liszt Research, the Democratic-aligned polling firm, found that 63 percent of respondents felt “very” concerned about the Medicaid cuts kicking seniors out of their nursing homes.

Medicaid is often thought of in Washington as an entitlement stepchild, less important to the safety net than Medicare and Social Security. but the polling results reveal that across the country, the assistance that Medicare provides to people's parents in their twilight years makes it as integral as the other two, if not more so. We desperately love our parents--but, the poll finds, that doesn't mean we want them living with us again.

Before the social safety net was constructed, beginning with the New Deal that created Social Security and paved the way for Medicare and Medicaid, old folks' best option when they could no longer afford to live alone were bleak: Either move in with relatives or find refuge in a poorhouse.

Rep. John Dingell Jr. (D-Mich.) was born in 1926 and remembers the days before the payroll tax started stuffing those social welfare coffers. His father, a prominent House Democrat, stood behind FDR during the signing of the Social Security Act, and then Dingell Jr. was an architect of Medicare and a strong backer of Medicaid. "Goldwater, Reagan, the Tea Party folks are all really part of the same attempt, and that is to get rid of the New Deal and to get away from these dangerous, socialistic ideas," Dingell told HuffPost in an interview for a story on poorhouses. "I can remember the terror that existed with regard to those county poor farms."

Before the safety net was constructed, Dingell's childhood home became something of a nursing home. "[E]verybody and his second cousin piled in with their families. I had relatives that came to stay with my dad and mom I didn't even know were relatives. To tell you the truth, I'm not sure they are. And my grandad on Dad's side, who threw Dad out of the house, came to live with Dad. Dad was the only one of his kids who'd take care of him. He was, quite frankly, the only one who could afford to do so, because Pop was making a fairly decent living during the war, but he was supporting a whole tribe of Dingells and Selmerses and a whole bunch of others who had other Polish names but were related."

The latest Census numbers show multifamily households have surged to their highest numbers since 1968, a trend that will only be accelerated by cuts to Medicaid.

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