Medicaid, State Finances, and the Bottom Line for Businesses
Business Burdens Are Likely To Increase Despite Efforts To Control Costs
By Louis F. Rossiter and Randy F. Neice
Randy F. Neice is a second-year public policy graduate student, Thomas Jefferson Program in Public Policy, The College of William & Mary, Williamsburg, VA. He has completed an internship at the Government Accountability Office, Norfolk, Virginia. He received his bachelor’s degree from Michigan State University.
Current Medicaid expenditures account for about nine percent of the federal budget and almost a quarter of state budgets and are growing rapidly. State Medicaid budgets are especially vulnerable to recession since states cannot incur large and sustained fiscal deficits. Without change, Medicaid burdens will cause state finances to be diverted from infrastructure and education, with negative effects on the costs and productivity of business. Also affecting business are the state governments experimenting with policies that shift Medicaid burdens to private employers. Simultaneously, the states are initiating efforts to ease Medicaid’s relentless cost increases and address its long-run problems.