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Further complicating the situation after the late 1990s boom was the recession and continuing sluggish economy, which resulted in relatively high unemployment, underemployment, and an inherent drag on health care benefits and affordability. Combined with an increasing shift of costs to employees and other consumers, Medicaid and other social programs have seen their caseload and care level obligations increase. Cutbacks in coverage and beneficiary eligibility have, on the one hand, moderated the fiscal impact for certain programs, but have also increased the demands on the local government safety nets as individuals increasingly fall between the cracks.
The business cycle can be particularly harsh on these types of programs because downturns increase the number of individuals potentially eligible for coverage as a result of economic circumstances, but also lower government receipts as a result of erosion in the tax base and in economic activity overall. The economic and political pressures on politicians and on government, particularly at the local level, are quite intense as a result of these circumstances. Ultimately, only an economic expansion combined with an improvement in local, state, and federal government finances can help to alleviate these burdens. The need to develop more permanent solutions to providing care and coverage for those in greatest need continues regardless of the economic cycle, and these issues must eventually be addressed with an eye toward longer term and more permanent solutions.