Winners and Losers in State Budget Debates – Say Ahhh! A Children’s Health Policy Blog

I recently blogged about the way Medicaid has been affected in state budgets and concluded that while the program may incur more cuts, the future outlook is somewhat hopeful due to expected decreases in enrollment and rebounding state revenues.  However, an in depth analysis on state budget cuts by the Center on Budget and Policy Priorities reveals a more somber view of state Medicaid spending in FY 2012, especially when it comes to the effects felt by children and families.

Throughout the ongoing budget debates, both on a state and federal level, discussions on the effects of cuts to children and families have largely been absent.  Of the 20 states cutting spending on health care in FY 2012, three states are making cuts that will have a direct impact on children: Arizona, California, and Rhode Island. Parents are hit especially hard in New Jersey. Five other states: Florida, North Carolina, South Carolina, South Dakota, and Texas are cutting payment provider rates, which can result in greater difficulties for individuals and families with Medicaid coverage to find providers who accept their insurance. (In addition, three of these states: South Carolina, South Dakota, and Texas, have rainy day funds that remained untouched through their budget shortfall.)

As I mentioned in my previous post, states continue to be faced with tough budget decisions that come from having to serve more people with fewer resources.  However, the cuts to health care and other public services become questionable when tax cuts for those that need them the least are taken into consideration.  Let’s take a look at a few of the states where some will benefit in FY2012 at the expense of lost or reduced health care for the more vulnerable populations.

  • Arizona is continuing its freeze that began in January 2010 on KidsCare, the state’s CHIP.  As of July 15, 2011, there were 108,157 applicants on the program’s waiting list.  In fiscal year 2010, their state-only spending on CHIP was $18.2 million.  Yet, Arizona’s reduction in corporate tax liability and commercial property tax will cost the state nearly double that amount ($38 million) in fiscal year 2012.
  • New Jersey joined Arizona by passing a slew of corporation-friendly tax measures for fiscal year 2012 that will cost $107 million in the first year, and will increase to $271 million in three years.  Meanwhile, the state is seeking to reduce family eligibility for Medicaid from $25,000 to a mere $5,300 for a three-person family.  If approved by CMS, an estimated 23,000 parents will lose coverage.  Governor Christie argues that the slashes to Medicaid will save the state $300 million, $78 million less than what the corporate tax cuts will cost the state.
  • California will almost double premiums for families in the CHIP program who are between 151% and 200% of the FPL, in addition to raising copayments. Yet, California has reduced the tax liability for corporations by letting a temporary tax increase expire.

Choices like these make it obvious that low-income families and individuals are still bearing the brunt of budget cutbacks. Luckily, the stability protections contained in the ACA have largely been a safeguard against reductions in eligibility and harmful cuts to policies and procedures.  Yet, if these protections do not hold up in the ongoing debate on deficit reduction, these few instances could be a harbinger of what is to come.  

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