Families USA released a study entitled “Jobs at Risk: Federal Medicaid Cuts Would Harm State Economies.”
Over the next several months Congress, particularly the “Super Committee” will debate proposals to end the federal budget deficit. Medicaid cuts have already been proposed as an idea for cutting the deficit.
Medicaid cuts would cause serious harm to state economies. Every federal Medicaid dollar that flows into a state stimulates business activity and generates jobs. The loss of federal funding means there will be fewer dollars circulating through each state’s economy, as well as fewer dollars passing from one person to another in successive rounds of spending that drive economic growth. This loss of the “economic multiplier effect” that states would experience as a direct result of federal Medicaid cuts would be large and much greater than the amount of the dollar cuts themselves. State do not have the revenue to make up for the federal cuts.
Unemployment remains high, and decisions that would lead to additional job losses make little sense. Unfortunately, federal Medicaid cuts could severely worsen unemployment and further burden troubled state economies.
5% Cut in Federal Medicaid Spending
Business Activity Lost Due to a 5 Percent Medicaid Cut
- A 5% cut in federal Medicaid spending would mean that the 50 states and the District of Columbia would lose a total of $13.75 billion that is needed to support health care for vulnerable residents.
- The 10 states with the largest potential loss of business activity attributed to a 5% cut in federal Medicaid spending would be New York ($3.8 billion), California ($3.7 billion), Texas ($2.1 billion), Pennsylvania ($1.5 billion), Florida ($1.2 billion), Ohio ($1.2 billion), Illinois ($1.2 billion), Massachusetts ($1.0 billion), North Carolina ($942.1 million), and Michigan ($861.9 million).
- Even in the two states with the smallest Medicaid budgets, North Dakota and Wyoming, the potential loss of business activity from a 5% cut in federal Medicaid spending would be valued at $36.1 million and $30.7 million, respectively.
Jobs Lost Due to a 5 Percent Medicaid Cut
- The 10 states with the largest potential number of jobs lost due to a 5% cut in federal Medicaid spending would be New York (28,830), California (28,440), Texas (18,160), Pennsylvania (12,230), Florida (11,320), Ohio (11,270), Illinois (9,280), North Carolina (8,890), Michigan (7,670), and Massachusetts (7,600).
- Even in the two states with the smallest Medicaid budgets, North Dakota and Wyoming, the potential loss of jobs due to a 5% cut in federal Medicaid spending would be 410 and 300, respectively.