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State Budget Cuts Target Medicaid, Healthcare, and Education: Is Your Facility at Risk?


The coronavirus pandemic has crippled state budgets all over the country. With businesses closed and tourism stalled, many states aren’t collecting nearly as much revenue as they are used to. That means less money for essential government programs such as Medicare, education, and community health programs. Now, state legislators are facing tough decisions as they try to balance their budgets.

According to an analysis by the Urban Institute’s State and Local Finance Initiative, the pandemic could end up taking $200 billion from state budgets all over the country. Money has been tight for governments large and small, but these cuts could put the public at risk. Legislators and politicians are also using the crisis to target health programs that have long been on the partisan chopping block.

Find out what these cuts could mean for you and your community.

Checking in on State Budgets

Record high unemployment and dwindling sales and income tax revenue have decimated state budgets, especially for those that depend on tourism, live entertainment, and consumer shopping. State tax revenue was down 29% across the U.S. during the height of the pandemic, compared with last year.

Governors across party lines are looking for ways to shore up their budgets without putting the public at risk, but this can be a delicate thread to weave. Many state and local programs will likely take a hit; the question is: How much?

National Public Radio has created a helpful online tool for tracking state budget shortfalls. Log on to see how your state is holding up.

As Maryland Gov. Larry Hogan commented on the situation, “Responding to this crisis has created a multiyear budget crisis unlike anything the state has ever faced before, more than three times worse than the Great Recession.” For that state, the legislature decided to cut nearly $190 million from higher education, as well as programs designed to reduce crime in Baltimore, support for foster care providers, and even public defenders.

Cutting healthcare and education in the middle of the pandemic could spell disaster for some communities. That’s why many states are pleading to the federal government for help, but it’s not clear if it’s coming any time soon. California has even created a contingency budget in case any additional federal funding doesn’t come through. The contingency budget would leave thousands of government workers out of a job.

Protecting Education, Healthcare

As you might imagine, this isn’t exactly the ideal time to take money away from education and healthcare. Many facilities are operating in the red as they postpone elective procedures and stock up on PPE. The same is true of classrooms and schools, whether they are educating students remotely or in the classroom.

However, some states may not have a choice.

  • California Avoids the Worst-Case Scenario

In California, Democratic lawmakers were able to dissuade Gov. Gavin Newsom from making deep cuts to several safety net programs that help older adults and low-income residents avoid long-term care facilities, which have been hotspots for the coronavirus. At the last minute, both parties were able to agree on a revised budget that’s designed to keep these programs afloat, so these individuals don’t end up in nursing homes.

However, the 2020-2021 state budget looks to be headed for a $54 billion shortfall. To help pay for these safety net programs, the state will pull money from rainy day funds, reduce state employee pay, and defer payments to K-12 education programs.

Lawmakers in Nevada were able to hold off similar cuts in their state, preserving Medicaid funding.

  • Texas Takes Aim at Women’s Health

Things are getting even dicier in Texas, where state lawmakers were threatening to pull funding from a range of public health programs, including those for women and mothers. Public outcry forced Texas’ Health and Human Services Commission (HHSC) to backtrack on these cuts.

Advocates say the state budget has been shrouded in a lack of transparency. Back in June, Republican lawmakers were considering $133 million in potential cuts, including nearly $3.8 million from women’s health programs that offer free and low-cost contraception and screenings for cholesterol, diabetes, and breast and cervical cancer. Also on the chopping block were counseling programs for toddlers with disabilities and family violence prevention programs.

HHSC officials have since walked back these plans, but the new budget includes cuts to safety inspections, which could put daycare centers and the state’s foster care system at risk.

However, state officials are still trying to give money to what’s known as the Alternative to Abortion program (A2A), which is run by the anti-abortion nonprofit Texas Pregnancy Care Network. The program has collected $170 million since it began in 2006, with staggering growth in recent years.

State legislators are trying to send more money to A2A, but pro-choice advocates say these “care centers” do little in terms of public health. Studies show A2A centers spend the bulk of their money on counseling and dissuading women from having an abortion, instead of other services, such as providing maternity clothing, diapers, and pregnancy and childbirth classes.

Commenting on the proposed changes, state representative Donna Howard told a local news outlet, “At no point has it been clear what the actual benefits of the program are. Nothing is indicating a need for financial expansion.”

Texas currently has the highest rate of uninsured women of childbearing age in the country.

  • Calculating the FMAPs

Federal Medicaid Assistance Percentages (FMAP) are getting a lot of attention at the moment. FMAPs range from between $1.28 and $4.95. The federal government will pay a certain percentage for every dollar the state spends on Medicaid; however, there is no law requiring states to spend this money.

States looking to cut their Medicaid spending will lose even more money on the federal level. For example, if Colorado takes $1 away from Medicaid, the state will lose an additional $1.28 at the federal level, stripping these programs of $2.28. For Mississippi, the math gets even worse. The state would lose a total of $5.95 for every dollar it cuts from Medicaid.

State budgets are currently in freefall across the country. Lawmakers are looking to make the best of this difficult situation, but there’s just not enough money to go around. Keep this information in mind as your state looks for ways to balance its budget.

Steven Briggs
Steven Briggs is a healthcare writer for Scrubs Magazine, hailing from Brooklyn, NY. With both of his parents working in the healthcare industry, Steven writes about the various issues and concerns facing the industry today.

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