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Congress is currently considering budget plans that follow the president's lead and prioritize tax cuts for the wealthiest Americans at the expense of Medicaid funding. The budget resolutions under consideration in the House and Senate would each cut federal funding for Medicaid by approximately $15 billion while providing additional money for tax changes, which would include $23 billion in tax cuts for capital gains and dividends.
[Update 4.27.2005] While the Senate voted to eliminate the Medicaid cuts altogether, it now appears that the House and Senate conferees will report a final budget that contains approximately $10 billion in Medicaid cuts. While the cut is smaller than originally proposed, both states and Medicaid beneficiaries still stand to lose significantly.
The Medicaid cuts would have important implications for states' budgets and for health care for the poor. At the same time, the budgets under consideration contains tens of billions of dollars in new tax cuts, which would overwhelmingly benefit those best able to make the sacrifices necessary to reduce the deficit.
This analysis examines the state-by-state impact of the federal Medicaid cuts as proposed by the president and the Congress, and juxtaposes the results with state-by-state data on the magnitude of the tax cuts under consideration.
Under the president's proposal, the five-year revenue lost from the proposed tax cuts would total eight times the size of the Medicaid cuts. One component of the tax changes, the reduction in capital gains and dividend tax rates-a change that would primarily benefit those making more than $200,000 a year-would be nearly twice the size of the five-year Medicaid cut.
In short, these painful cuts to Medicaid can be easily avoided by simply scaling back some of the proposed tax cuts that would benefit the very wealthy.
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[1] Update (4.25.2005): The final Senate version of the budget resolution removed these 5-year cuts to Medicaid. The House and Senate will negotiate over the final amount of the cut in conference before bringing the final resolution to the floor of each chamber.
[2] Update (4.26.2005): The House and Senate are reportedly considering a conference report that would contian $10 billion in cuts.