Worsening Economic Conditions Will Increase Demand for the State Children's Health Insurance Program and Medicaid

Worsening economic conditions will likely create substantial increases in demand for enrollment in states’ Medicaid and Children’s Health Insurance Program (CHIP) programs over the next few years, even apart from the normal growth trend in public coverage. If employment growth falls to the levels seen following the 2001 recession, then demand for these programs will grow as the economy slows.

• Between 700,000 and 1.1 million additional children will enroll in Medicaid/CHIP each year due to slowing employment growth alone.

• Up to 1.5 million total additional persons will enroll in Medicaid each year due to slowing employment growth alone.

Increases in Medicaid/CHIP enrollment combined with federal funding cuts proposed by President Bush in the Medicaid and CHIP programs could create additional pressure on state budgets that are already strained by the weak national economy and the worsening housing crisis.

Nearly every state is required to balance its budget. In the face of the economic slowdown, state governments will therefore face a difficult choice between cutting back on health insurance for children, implementing cuts in other budget areas, or raising taxes. If proposed Administration regulations are implemented, the additional cuts in Federal support will make the problem even more severe.

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