Washington That day in July was one that Tammy Morse won’t soon forget.
Five months earlier, her husband lost his job as a recruiter for the financial services industry. Now it was the summer and the family savings were gone. She saw no way to get health insurance coverage for her family other than to apply for Medicaid.
And that was why she made the drive from her Stratford, Conn., home to the nearest office of the state’s Department of Social Services.
“It was humbling,” said the mother of two. “It’s funny how your attitude changes, because honestly, I was probably a little judgmental previously. ... For lack of a better way to put it, that was for other people. It wasn’t for me.”
Around the country, similar stories are playing out for thousands of families.
Since the recession began a year ago, many states have seen increases in the Medicaid rolls just as tax revenues are falling below projections. Governors have lobbied President-elect Barack Obama and Congress to help them weather the downturn by increasing the federal government’s share of Medicaid spending for at least two years.
The governors said the extra $40 billion would ease the service cuts or tax increases that legislatures need to balance state budgets.
The unemployment rate has jumped from about 4.7 percent last December, when the recession began, to 6.7 percent today. Economists estimated in a Kaiser Family Foundation report that each 1 percent gain in the unemployment rate adds 1 million people to the Medicaid and State Children’s Health Insurance Program.
In Connecticut, a state faring better than many, enrollment in the Medicaid program, called HUSKY (Healthcare for Uninsured Kids and Youth), has climbed from about 312,000 last December to about 329,500 in November — a 6 percent increase. Many who lost their jobs were eligible to continue group health insurance. But that is not an option in most cases because they no longer have an employer picking up a large share of their premiums.
Insurance for son
Cassandra Edmonds, a single parent who joined HUSKY in October, is a newcomer to the program like Morse. Her job as a parent-activities coordinator with the Bridgeport school district was eliminated to save money. She has found a job selling life insurance, but her earnings are low enough that she is eligible for HUSKY coverage.
The insurance is particularly important for her 4-year-old son, who has glaucoma and tubes in his ears to prevent repeated infections. He has to check in with a specialist about every three months for each condition. Edmonds said she never imagined she would be relying on government safety nets to make that happen.
“I never really thought I would be without a job,” Edmonds said. “I have an MBA. I’m not trying to sound cocky or anything.”
Medicaid insures nearly one in six low-income people in the U.S. The program typically covers the very poor and about half of enrollees are children. Spending came to $333 billion in the budget year ending Sept. 30, 2007. Washington picks up about 57 percent of that; the states cover the remainder.
Better planning needed
Michael Cannon, director of health policy studies at the Cato Institute, a libertarian think tank, sympathizes with new families now relying on Medicaid. Still, he disagrees that the federal government should reward states that did not plan adequately for the bad times. Better planning would mean setting aside more money for rainy day funds and not expanding the scope of Medicaid during the good economic times, he said.
“The states make these promises they know they can’t keep and then they run to Congress to bail them out,” Cannon said. “And Congress typically ends up bailing them out.”
Cannon said the net result is the government gradually is becoming more responsible for paying for health insurance coverage.
The bill will fall to future generations. “And who better to push those costs onto than to people who can’t even vote yet?” Cannon said.
Advocacy groups report that 43 states face budget shortfalls this year or next. The Center on Budget and Policy Priorities estimates states face a $79 billion gap they must bridge this year.
Nineteen states have enacted or proposed cuts in their Medicaid or State Children’s Health Insurance Program budgets for the current budget year or for 2010, according to Families USA, which conducted a state-by-state survey.
The most common Medicaid cut that states made was to lower payments to doctors and other providers; some 14 states have done so this year. Medicaid patients already often have trouble finding a doctor who will take them, so the payment cuts could make that problem worse.
Diane Rowland, executive vice president at the Kaiser Family Foundation, said that boosting the Medicaid matching rate will prevent higher rates of uninsured and maintain patient access to hospitals, nursing homes and home health care.
“In the absence of this kind of stimulus, you might see more layoffs in the health care sector,” she said. “These dollars can start to flow to states the day after Congress enacts it because it’s just changing the formula for how Medicaid bills are shared.”
Rowland said some states did expand during the good times, causing a portion of the budget crunch they now face, but for the most part, the problem is the economy.