Expected Loss of Tax Revenue Due To Stimulus Package Prompts States To Consider Health Program Cuts

Many states will likely look to "scale back" Medicaid and other programs in an attempt to make up for revenue they are expected to lose as a result of tax provisions in the economic stimulus package signed last week by President Bush, Wall Street Journal reports. The National Governors Association estimates that measures allowing some businesses to speed the depreciation of new equipment and claim higher deductions on business income taxes will cost states as much as $14.7 billion over the next three years. Alysoun McLaughlin, a policy specialist for the National Conference of State Legislatures, said states are looking to "undo some of the damage that has been done." For example, governors are "stepping up pressure" on the Bush administration to allow them to "scale back" Medicaid by limiting doctors' visits or charging copayments to low-income patients, the Journal reports. NGA Executive Director Raymond Scheppach said, "[T]hese are the real life, hard choices governors will have to make in light of the action Congress took" (Pinkston, Wall Street Journal, 3/13).