MEDICAID: A BOON FOR THE POOR AND THE ECONOMY

It’s odd, but true. Sometimes, you need to spend money to make money. And, when you can get someone else to match the money you spend, spending money to make money is, well, easier.

We all have heard stories in which the truly rich get other people to fund their projects. The Donald Trumps of the world don’t actually invest all of their money in the buildings they building; quite often, there are other, less flashy, investors who actually front most of the money.

Well, when it comes to Medicaid, New Jersey is Donald Trump.

For the past several years, state budgets have been pushed to the edge. The plunge in the stock market caused a concomitant plunge in tax revenues. Since people are making less – or no – money in the stock market, states are making less – or no – money from taxing stock gains.

One the most expensive components of a state’s budget is its Medicaid program. On average, the Medicaid program accounts for between 20 to 25% of a state’s budget.

Yet, a recent study that the Rockefeller Institute of Government conducted found that states – or at least the ten sample states included in the study – are reluctant to cut spending on their Medicaid programs.

The Rockefeller Institute sampled tens states – of which New Jersey was one – and found that in most states the Medicaid budget was not significantly reduced, despite the significant reduction in revenues. The Institute found that states are reluctant to reduce their Medicaid budgets because of the ancillary benefits that the states realize from the Medicaid program.

For instance, the Kaiser Foundation – a non-profit organization that conducts many surveys of America’s health care programs – found that New Jersey businesses generate over eight billion dollars in revenues from the four billion dollars that New Jersey and the federal government spends on the Medicaid program in New Jersey.

Since the federal government contributes half of the money that New Jersey spends on the Medicaid program, the state of New Jersey spends two billion dollars to produce eight billion dollars in revenue for its residents.

Eight billion dollars worth of jobs. I don’t have any data to support my thoughts on this issue, but something tells me that the Medicaid program is probably one of the largest employers – directly, but primarily indirectly – in New Jersey.

Nursing homes, nurses, home health aides, assisted living residences, hospitals – a very large portion of the health and long-term care systems is fueled with Medicaid dollars. Many of the people who work in those fields owe their jobs – directly or indirectly – to the Medicaid program.

Many people talk about cutting the Medicaid program, as if cutting the program will have no effect on the economy other than a dollar-for-dollar reduction in the amount of money the state spends. Few people think about the reduction in jobs, quality-of-life, and revenues that reductions in the Medicaid program would bring.

The Medicaid program is good for the poor, the disabled, and the elderly, as well as those who serve these communities. Without the program, not only would the indigent of this state find themselves without necessary health care coverage but those who provide such care would find themselves without a job.

Many people believe that welfare programs are hand-outs to the poor, a drain on the economy. The reality is, these programs provide more jobs and more revenues than the money they costs.