Recent cuts to the Supplemental Nutrition Assistance Program (SNAP) and Medicaid will result in substantial job loss and declining state revenues for years to come, according to researchers at George Washington University.
In anticipation of the budget reconciliation bill, the researchers ran an economic modeling system to estimate the effects of federal funding cuts for Medicaid and (SNAP) on state economies. Their model projects a myriad of economic ramifications for Americans, including about 1.3 million jobs lost nationwide in health care, food related industries, and other sectors. The cuts will also result in lower state gross domestic products (GDPs) — amounting to US$113 billion in losses.
President Donald Trump signed the tax and spending bill into law early July despite pushback from anti-hunger advocates and community leaders. The bill includes reductions of more than US$1 trillion between Medicaid and SNAP. These cuts will result in about 5 million people seeing reduced SNAP benefits. Additionally, 11.8 million Americans may lose their health insurance according to estimates from the Congressional Budget Office.
“These cuts are bad for families, bad for businesses, and bad for the economy as a whole,” Crystal FitzSimons, President of the Food Research & Action Center (FRAC) tells Food Tank. “SNAP is one of the strongest tools we have for keeping people fed and supporting local economies, especially in rural areas. Every SNAP dollar generates up to US$1.80 in economic activity during a downturn, supporting everyone from farmers and truckers to grocery store clerks and small businesses.”
States are already grappling with how to balance budgets and are beginning to cut other critical programs such as the Summer Electronic Benefits Transfer (EBT) program which provides free lunches to school-aged children. Without these systems in place FitzSimons warns that, “families will once again be left to make the impossible choice between paying for groceries or paying the rent. No one should have to make that choice.”
SNAP benefits, historically funded solely by the federal government, will now be shifted to state contributions. States must contribute to SNAP benefits in relation to error rates, the higher a state’s error rate, the higher amount of contributions it must make. Additionally, states will be required to cover 75 percent of administration costs and new work requirements will go into effect.
According to research from George Washington University and the Harvard T. H. Chan School of Public Health, work requirements fail to lead to increased employment. Instead, they “push even more families off [SNAP benefits] and deepen rural food insecurity.” FitzSimons tells Food Tank.
“Cuts to Medicaid and SNAP have drastic repercussions for the states and have economic effects that ripple out beyond healthcare and food,” Dr. Leighton Ku, Director of the Center for Health Policy Research at George Washington University and one of the lead researchers on the report, tells Food Tank. “The cuts are deep and harm state economies, employment, and state and local tax revenues.”
The modeling from Ku and his colleagues is based on the original House bill, and they are currently working on a revised analysis that takes into account the detailed provisions of the law. But, Ku tells Food Tank, he expects the general effects will not differ greatly, noting “the overall impact is similar with more [than] $1 trillion in cuts over a decade.”
GWU’s model reveals a multiplier effect: Every dollar cut from SNAP and Medicaid will lead to a larger negative impact on the economy. Health care providers such as hospitals, doctors’ offices, pharmacies, and nursing homes, as well as grocery and food stores will likely see lower revenue as eaters’ spending falls. Employer income loss can lead to reduced salaries, cuts in staffing, and job loss. State and local government revenue will drop as well due to reduced sales, income, and property taxes. Ultimately, the researchers show that states’ economies will suffer.
“Not only do [SNAP and Medicaid] directly support major parts of the health and food economy in each state, they are counter-cyclical programs, designed to provide more aid when the economy is weak and there are more poor people,” Ku explains to Food Tank. “Cuts to Medicaid and SNAP have drastic repercussions for the states and have economic effects that ripple out beyond health care and food.”
Articles like the one you just read are made possible through the generosity of Food Tank members. Can we please count on you to be part of our growing movement? Become a member today by clicking here.
Photo courtesy of Rithika Gopal, Unsplash
