State Budgets

Fitch Downgrade Could Mean Medicaid Cuts: Brooklyn Roberts and Thomas Savidge in The Wall Street Journal

Amid a debt crisis, Congress would likely slash aid to states.

Brooklyn Roberts, senior director of the Health and Human Services Task Force and Thomas Savidge, research director at ALEC’s Center for State Fiscal Reform recently co-authored an op-ed in The Wall Street Journal highlighting budget problems states could face after Fitch Ratings lowered the federal government’s credit rating from AAA to AA+. 

With the recent U.S. credit downgrade, Americans are left wondering how Congress will right the ship. Fitch Ratings’ prediction of “fiscal deterioration” could mean painful spending cuts to programs like Medicaid, which provides health insurance to 90 million individuals. If federal funding dries up, states will face a nightmare budgeting scenario to keep current Medicaid coverage in place.

When the Affordable Care Act (ACA) passed, states could opt into expanding Medicaid – the joint state and federal health insurance program for low-income and elderly adults – to millions of Americans earning within 138% of the Federal Poverty Level. The ACA’s Medicaid expansion enticed states with an enhanced federal matching rate of 100%. By 2020, the federal government coverage dropped to 90% with states picking up the remaining 10% of the cost.

Currently, all but 10 states expanded Medicaid under ACA believing those generous federal matches were permanent. States that opted for Medicaid expansion, however, are already contributing more towards Medicaid spending than originally planned, causing some to warn that current Medicaid spending is unsustainable, especially with budget battles on the horizon.

Read the full article here.

In Depth: State Budgets

Smart budgeting is vital to a state’s financial health. The ALEC State Budget Reform Toolkit offers more than 20 policy ideas for addressing today’s shortfalls in a forthright manner, without resorting to budget gimmicks or damaging tax increases. One way to stabilize budgets over time is to embrace…

+ State Budgets In Depth