It is possible that later this week the House of Representatives in Washington will vote on a budget proposal that has the potential to do significant damage to Medicaid, which is MassHealth in this state.  For quite a while now, those who would seek to cut Medicaid and harm the people who rely on it have bemoaned the amount of money needed to fund the entitlement program annually.  This is shortsighted at best because Medicaid is not simply an expense; it is also a local economic driver.  In addition to hurting people with disabilities who depend on MassHealth, cuts to the Medicaid program also harm the economy.

Provider agencies that bill Medicaid/MassHealth for services don’t just keep the money once the bill is paid.  It isn’t sitting a drawer somewhere.  That money is used to pay many thousands of employees in Massachusetts and many millions of people across the country.  The bulk of the money received from Medicaid at these agencies goes back into the economy through salary and benefits.  It doesn’t just evaporate into thin air.  And where do people who work in human services programs funded through Medicaid spend their money?  They spend it locally where they live.

Let’s suggest that a program with an 11% overhead cost bills Medicaid for $1,000,000 in services.  That means that between salary and benefits, almost $800,000 of that “expense” is being pumped right back into the economy through people’s paychecks.  And these people spend those wages locally where they buy gas, food, clothes, and goods of all variety.  The use their wages to pay for child care, housing, entertainment and to support local businesses.  This is just a small example but it illustrates just how much economic harm could be caused by a proposal that threatens hundreds of billions of dollars in Medicaid funding, to say nothing of the catastrophe such cuts would cause for people who rely on services to remain safe.

Sweeping and vast cuts to Medicaid isn’t just cruel and irresponsible.  It’s also not very smart.

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