Education Funding

Governors Warn Medicaid Costs Threaten School Funding

By Reagan Walker — September 20, 1989 4 min read

The nation’s governors have warned the Congress that expensive mandates now being considered for the Medicaid program pose a threat to funding for education and other state services.

“This is a serious threat to the education community,” Alicia Pelrine, group director for human resources at the National Governors’Association said last week.

As part of the budget-reconciliation bill, the House Energy and Commerce Committee has adopted a measure that would require states to expand Medicaid eligibility to all pregnant women and to infants up to age 1 whose family income is at or below 185 percent of the federal poverty level. The reconciliation bill is pending in the House Ways and Means Committee.

The governors contend that this requirement could cost states as much as $11.2 billion in state funds over five years and put tremendous pressure on already strained budgets.

While the federal government pays one-half of the Medicaid bill, the states must absorb the rest.

And, unlike the federal government, many states have balanced-budget amendments, Ms. Pelrine said. Therefore, new mandates would force states to cut programs, such as education, or raise taxes in order to absorb the costs.

“The Congress has exceeded their credit limit, and now they are trying to use ours,” Ms. Pelrine said. “But we can’t use the blue smoke and mirrors tactic.”

In an effort led by Ohio Gov. Richard F. Celeste, chairman of the National Governors Association’s human resources committee, the governors have sent a clear message to the Congress that the practice of approving new federal mandates for Medicaid but then expecting the states to pick up the tab should come to a halt.

At the n.g.a.'s summer meeting in Chicago, the governors unanimously endorsed a resolution opposing the legislation and calling for a two-year freeze on the enactment of further Medicaid mandates on the states.

In a letter sent to all members of the Congress, the governors said the resolution is “based on our increasing concern with the impact of the last three years of Medicaid mandates on our budgets, and consequently, on our ability to properly fund education and other important services.”

The governors have proposed using the two-year freeze period to work with the Congress and the White House--in an effort similar to the recent welfare reform--to find the solutions to the nation’s health care problems.

Medicaid spending has consistently grown faster than most other categories of state expenditures, according to the National Council of State Legislatures.

In fiscal year 1990, Medicaid spending will increase an average of 10 percent in the states, with some states, such as Florida, facing nearly a 30 percent increase, n.c.s.l. figures show.

According to the n.g.a., Medicaid costs have increasingly demanded a larger chunk of state budgets. In 1980, such costs averaged about 8.5 percent of state budgets, but have now gone way over 10 percent, Ms. Pelrine said.

If the new mandates being considered are enacted, Medicaid costs could take up to 16 percent of state budgets by 1994, Ms. Pelrine said.

Under the proposal, states would be required to cover pregnant women and infants up to age one up to 130 percent of the poverty level by July 1, 1990, up to 150 percent by July 1, 1992, and meet the 185 percent level by July 1, 1993.

At the highest level, states would have to provide Medicaid coverage to families of four earning up to $22,000 a year--which could be more than half the total population in some states, according to the n.g.a.

The proposed legislation also would require states to cover all children below the poverty level under age 6 by July 1, 1990, and then cover children one year older in each succeeding year.

“When the ‘feds’ start mandating in areas such as health care, you are going to see trade-offs with education and transportation and other state priorities,” said Marguerite Snyder, a policy specialist for n.c.s.l., which opposes mandates, but has not called for a freeze.

Reuven Carlyle, a spokesman for Governor Celeste, concurred, adding: “It is simply wrong to have to choose health care services of the public versus the education of our children,” Mr. Carlyle, said. “Both are important to quality of life.”

The n.g.a argues the states have already moved aggressively to expand eligibility. While absorbing the costs of nursing home reform and catastrophic health care legislation, 44 states have voluntarily picked up an option to offer Medicaid to pregnant women and infants with family income below the federal poverty level.

And while the governors have asked for a moratorium on new Medicaid mandates, they have given equal emphasis in their plea to the Congress to finding solutions to the nation’s health care problems.

In the resolution, the governors say the accelerating costs of Medicaid, Medicare, and other health programs argue for a new look at health care financing options, including federalization of Medicaid or an aggressive effort to restructure the system.

“We are keenly aware that 37 million Americans remain uninsured,” the governors said in the letter. “Consequently, we believe now is the time to debate solutions to our national health crisis that accommodate both access to quality health care for all Americans and the need to control spiraling health care costs.”

Mr. Carlyle said Governor Celeste’s “entire point is that we need to create a more effective, efficient, and comprehensive health care system.”

“But we won’t fulfill a public obligation if we pit health care against education,” Mr. Carlyle said. “There is no way we should have to make that compromise.”

A version of this article appeared in the September 20, 1989 edition of Education Week as Governors Warn Medicaid Costs Threaten School Funding

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