New Medicaid Rules Called Further Threat to Budgets

By Lonnie Harp — November 21, 1990 4 min read
  • Save to favorites
  • Print

The federal budget compromise approved in the final hours of the 101st Congress will further burden already-strapped state treasuries by imposing new Medicaid mandates that will cost states an estimated $3 billion over the next five years, fiscal analysts warn.

In light of sluggish revenue collections in many states and increased concerns of voter backlash over tax hikes, this year’s Medicaid increases threaten to take a larger slice of state spending at the expense of education and other social programs.

“It’s going to be a problem for the states because many of them are experiencing decreased revenues and having to cut budgets as it is without the new mandates,” said Mary Dingrando, senior staff associate for the National Association of State Budget Officers.

The contrast between rising Medicaid costs and stagnant tax revenue will force tough decisions in many states, added Ron Snell, fiscal program director for the National Conference of State Legislatures.

“You can’t avoid spending more on Medicaid, and you can’t avoid spending more on education,” he said. “It’s impossible to cut that, but you can reduce the increase. Medicaid funding will bite into other areas.”

Despite such fiscal concerns, supporters of the latest Medicaid expansion argue that it will greatly improve health-care services for millions of poor youths.

The new Medicaid demands mark the fourth-straight year that federal lawmakers have decided to increase the requirements they impose on states under the health-care program for the poor.

On average, the federal government pays about half of the cost of Medicaid, while the states pick up the rest.

Even without the added fiscal 1991 costs, states faced an additional $2.5 billion in Medicaid mandates from earlier years, according to the National Governors’ Association.

In addition to a long list of tax increases and cost-saving changes in other programs aimed at reducing the federal deficit by $492 billion over five years, the budget accord finally reached last month between President Bush and members of the Congress also contained several provisions to increase the scope and cost of the Medicaid program.

The most expensive requirement, accounting for more than half of the overall price increase for states, would require coverage of all children ages 6 to 19 whose family income falls below the federal poverty line, the nga said.

Last year, Congress mandated Medicaid coverage for children younger than age 6 with family in8comes below 133 percent of the poverty line.

While this year’s plan would be phased in, the nga estimates its cost to the states at $1.6 billion over five years.

Additional Medicaid services that will be required of states include:

Payment of all premiums, deductibles and co-payments for qualified Medicare recipients who also qualify for Medicaid benefits, at an estimated cost of $700 million over five years;

Expanded home- and community-care for frail elderly beneficiaries, and expanded services for mentally retarded and disabled recipients, estimated at $680 million over five years; and

Continuous coverage of all eligible infants and pregnant women, estimated at $100 million over five years.

In a joint statement issued after the budget plan’s passage, Gov. Booth Gardner of Washington, the nga chairman, and Gov. John Ashcroft of Missouri, the association’s vice chairman, complained that the new health-care mandates, combined with tax increases on gasoline, alcohol, and cigarettes, which are frequently targeted by state taxes, leave many states with few options for dealing with their fiscal woes.

The Governors criticized the Medicaid expansion as a Congressional attempt “to pass on national health insurance to the states through incremental Medicaid mandates.”

Mr. Snell of the ncsl said governors and lawmakers alike fear that Medicaid increases will soon become a more obvious intruder in stateel15lbudgets, since the poor economy will not allow the kinds of budget remedies that masked health-care inflation during the 1980’s.

The amounts of money Medicaid increases will involve “are not gigantic numbers,” Mr. Snell said, “but one thing we know for sure about Medicaid is that states always underestimate” its cost.

In the current fiscal year, states project Medicaid expenditures to rise by more than 13 percent, while state revenue is projected to grow at about 6 percent, according to an ncsl survey.

“The problem with Medicaid is that it’s growing faster than state budgets in general, and it takes the growth money that comes in,” he added.

Even without added requirements, the nga said, many states are fighting losing battles in an effort to gain control of health-care costs.

The growth of Medicaid programs alone will probably cost states an extra $6 billion in fiscal 1991, and increases will amount to $33 billion over five years, according to nga estimates.

While advocates emphasize the long-term benefits to be obtained from improving health care for low-income children, Mr. Snell said the promise is hard to swallow in the face of a souring economy.

“The bad news is coming in from all across the country,” he said, pointing to massive budget shortfalls expected in such states as California, Florida, Michigan, and Pennsylvania.

“There just aren’t any bright spots among the bigger states,” Mr. Snell said.

Commenting has been disabled on effective Sept. 8. Please visit our FAQ section for more details. To get in touch with us visit our contact page, follow us on social media, or submit a Letter to the Editor.


This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Teaching Webinar
6 Key Trends in Teaching and Learning
As we enter the third school year affected by the pandemic—and a return to the classroom for many—we come better prepared, but questions remain. How will the last year impact teaching and learning this school
Content provided by Instructure
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Equity & Diversity Webinar
Leadership for Racial Equity in Schools and Beyond
While the COVID-19 pandemic continues to reveal systemic racial disparities in educational opportunity, there are revelations to which we can and must respond. Through conscientious efforts, using an intentional focus on race, school leaders can
Content provided by Corwin
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Equity & Diversity Webinar
Evaluating Equity to Drive District-Wide Action this School Year
Educational leaders are charged with ensuring all students receive equitable access to a high-quality education. Yet equity is more than an action. It is a lens through which we continuously review instructional practices and student
Content provided by BetterLesson

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Education Schools Get the Brunt of Latest COVID Wave in South Carolina
In the past few weeks, South Carolina has set records for COVID-19 hospitalizations and new cases have approached peak levels of last winter.
4 min read
Two Camden Elementary School students in masks listen as South Carolina Gov. Henry McMaster talks about steps the school is taking to fight COVID-19, Wednesday, Sept. 15, 2021, in Camden, S.C. McMaster has adamantly and repeatedly come out against requiring masks in schools even as the average number of daily COVID-19 cases in the state has risen since early June. (AP Photo/Jeffrey Collins)
Education More States Are Requiring Schools to Teach Native American History and Culture
Advocates say their efforts have gained some momentum with the nation’s reckoning over racial injustice since the killing of George Floyd.
3 min read
A dancer participates in an intertribal dance at Schemitzun on the Mashantucket Pequot Reservation in Mashantucket, Conn., Saturday, Aug. 28, 2021. Connecticut and a handful of other states have recently decided to mandate students be taught about Native American culture and history. (AP Photo/Jessica Hill)
Education Judge's Temporary Order Allows Iowa Schools to Mandate Masks
A federal judge ordered the state to immediately halt enforcement of a law that prevents school boards from ordering masks to be worn.
4 min read
Iowa Gov. Kim Reynolds speaks to reporters following a news conference, Thursday, Aug. 19, 2021, in West Des Moines, Iowa. Reynolds lashed out at President Joe Biden Thursday after he ordered his education secretary to explore possible legal action against states that have blocked school mask mandates and other public health measures meant to protect students against COVID-19. Reynolds, a Republican, has signed a bill into law that prohibits school officials from requiring masks, raising concerns as delta variant virus cases climb across the state and schools resume classes soon. (AP Photo/Charlie Neibergall)
Education Hurricane Ida Deals New Blow to Louisiana Schools Struggling to Reopen
The opening of the school year offered teachers a chance to fully assess the pandemic's effects, only to have students forced out again.
8 min read
Six-year-old Mary-Louise Lacobon sits on a fallen tree beside the remnants of her family's home destroyed by Hurricane Ida, in Dulac, La., on Sept. 4, 2021. Louisiana students, who were back in class after a year and a half of COVID-19 disruptions kept many of them at home, are now missing school again after Hurricane Ida. A quarter-million public school students statewide have no school to report to, though top educators are promising a return is, at most, weeks away, not months.
Six-year-old Mary-Louise Lacobon sits on a fallen tree beside the remnants of her family's home destroyed by Hurricane Ida, in Dulac, La., on Sept. 4, 2021.
John Locher/AP