Bush Administration proposals to allow participation by faith-based organizations in federally funded social service programs have touched off considerable controversy. To date, however, there has been little public discussion and no published literature about the involvement of these organizations in the largest intergovernmental social service program the American federal system operates: Medicaid. This program accounted for over $260 billion in federal, state and local spending in FY 2003 for a wide range of services to over 40 million enrollees. The program supports health care, long term care, mental health, prescription drugs, and a variety of other residential and non-residential services for a wide range of client groups ranging from low income women and children to the low income elderly and those who are disabled.
There are several reasons for interest in Medicaid as a potential funding source for religious organizations. First, it is large and growing relatively rapidly--roughly 45 percent since 1999--while funding for other programs advanced as sources of support for these organizations are growing at much slower rates and Medicaid has been relatively unaffected by recent state budget difficulties, while funding for other social programs has been reduced or grown only slowly, if at all. Second, Medicaid is a major source of financial support for mental health and substance abuse programs, service areas where spirituality has received attention as a therapeutic method. While systematic evidence is scarce, one estimate placed annual Medicaid spending for mental health and substance abuse in 1997 at roughly $29 billion; more than 10 times the amount spent annually under the substance abuse and mental health block grant which has been included in the Administration’s faith based initiative.