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Economy & Business

Missouri risks losing jobs and stimulus dollars if Medicaid budget cuts stand, says group

This article first appeared in the St. Louis Beacon, April 2, 2009 - If Missouri does not take full advantage of stimulus money available from Washington, thousands of Missourians will be hurt directly and many more will suffer indirect harm as well, budget analysts said Thursday.

Amy Blouin, executive director of the Missouri Budget Project, said that because a budget bill passed by the Missouri House fails to take full advantage of money available for Medicaid, more people will be hurt than just those who need the help with health insurance.

Instead, she told a conference call with journalists, others in Missouri will be hurt as well because of lost jobs and the lost state revenue those jobs provide.

"With the economy in recession," Blouin said, "we know that as families lose access to jobs, more of those are families are becoming uninsured." She said that accepting all the federal stimulus money available "is a critical way we can help the families most impacted by the economic downturn and stimulate economic growth."

Blouin and Nick Johnson, director of the State Fiscal Project at the Center on Budget and Policy Priorities in Washington,  explained that the stimulus bill could provide nearly $4.3 billion for Missouri over the next two years, primarily from two sources:

  • Enhancing the federal matching rate for Medicaid
  • Using a fiscal stabilization fund for education and other services.

Because the budget bill passed by the Missouri House passed up the Medicaid money, Blouin said, the state could forfeit as many as 3,500 jobs directly in addition to another 2,000 jobs indirectly. The budget now moves to the Missouri Senate.
Much of the debate in Jefferson City over use of the federal stimulus money has come over the question of whether it should be used for one-time projects or to supplement ongoing expenses that would otherwise have to be cut.

Johnson and Blouin said they acknowledge a reluctance to use the money to pay for continuing programs, but in tough economic times, the approach makes sense.

"During a recession," Johnson said, "it is totally appropriate to use one-time money for ongoing expenses. I can certainly understand concern about what happens when this money runs out, but you have to understand we are in this very deep recession. Reserving the money for one-time uses, I think, would be a mistake."

Blouin said the decision by House leaders to forgo the Medicaid is really more about ideology than it is about economics.

"They don't think those are services that deserve extra money," she said. "I don't think they're correct in that, obviously.

"One of the things we've been trying to explain are the number of jobs attached to this money, so they understand that the lack of services will directly impact 77,000 Missourians. But all Missourians will be affected because it is going to damage our economy even further if we don't utilize those funds."

State Rep. Allen Icet, R-Wildwood, and chair of the House Budget Committee, couldn't be reached for comment.

Blouin also addressed the argument that rather than using the stimulus money for state programs, it could more effectively help Missourians by sending the funds to them directly.

She compared it to the years when the state had a budget surplus that had to be refunded to taxpayers because of the Hancock amendment.

"When we were hitting the spending lid and giving refunds back, the average taxpayer got about $40 over a five-year period," she said. "That $40 is not going to stretch very far for me. But that billion dollars, the cumulative total, would make a significant differences for state resources.

"What we do know from the research is that it is much more economically beneficial for the state to utilize the funds for services at this time. That will create more jobs than if we were to give each taxpayer a small amount of money. When we pool our resources, we can maximize the benefit for state services."

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