Revenue-Strapped States Struggle with Senior Care Programs: Study

Published February 1, 2009

With the economic slowdown causing some states to increase the cost of or cut back on some services for the low-income disabled or elderly, advocacy groups are calling for more federal help.

But analysts warn sending more money would just allow states to continue the excessive spending policies that led to the problems in the first place.

“There are a number of states that are considering budget cuts, and some have actually gone ahead with that,” said Edwin Park, a senior fellow at the Center on Budget and Policy Priorities (CBPP), a think tank based in Washington, DC. The group’s report finds at least 15 states have increased patient costs or cut back on medical, rehabilitative, home care, or other services.

More Cuts Predicted

“These cuts will likely only worsen with the recession,” said William Anderson, Ph.D., an economics professor at Frostburg State University in Maryland.

With the economy contracting, Anderson said, “the state government has got to make some priorities. You’ve got to make people in elder care or disability care a priority. They are not in a place to take care of themselves. For a lot of those people, it’s a matter of life and death.”

The CBPP report recommended the federal government provide “temporary fiscal relief” of an amount “substantially greater” than the $20 billion—$10 billion in additional Medicaid funds, and $10 billion more in “general grants”—sent to the states by the Bush administration during the recession of the early 2000s, even though doing so will add to the government deficit.

“Federal assistance is an option because the federal government can run a deficit, while [many] state governments cannot,” said Liz McNichol, a CBPP senior fellow.

State Policies Blamed

Health policy experts warned against billing taxpayers billions of dollars to bail states out of a jam many believe they got themselves into in the first place.

“States have to accept a fair share of the blame for [their financial] mess,” said Dennis Smith, a senior fellow at The Heritage Foundation’s Center for Health Policy Studies.

“State officials got themselves into this mess through the lure of easy money,” Smith noted. “When states had extra money, they were advised to put it into Medicaid so they could have their money doubled by federal taxpayers.”

States must become more realistic with their budgeting, said Kirk McGhee, executive director of the Georgia Association of Health Plans. “States should be thinking about how they can do more with less and bring efficiency to their programs,” he said.

Jillian Melchior ([email protected]) writes from Michigan. Maggie Goode ([email protected]) writes from Georgia.