WASHINGTON — Facing relentless fiscal pressure and exploding demand for government health care, virtually every state is making or considering substantial cuts in Medicaid, even as Democrats push to add 15 million people to the rolls.
Because they are temporarily barred from reducing eligibility, states have been left to cut “optional benefits,” like dental and vision care, and reduce payments to doctors and other health care providers.
In some states, governors are trying to avoid the deepest cuts by pushing for increases in tobacco taxes or new levies on hospitals and doctors, but many of those proposals are running into election-year trouble in conservative legislatures.
In Nevada, which faces an $881 million budget gap, Gov. Jim Gibbons, a Republican, proposed this month to end Medicaid coverage of adult day care, eyeglasses, hearing aids and dentures, and, for a savings of $829,304, to reduce the number of diapers provided monthly to incontinent adults (to 186 from 300).
“We are down to the ugly list of options,” the state’s director of health and human services, Mike Willden, told a legislative committee last week.
The Medicaid program already pays doctors and hospitals at levels well below those of Medicare and private insurance, and often below actual costs. Large numbers of doctors, therefore, do not accept Medicaid patients, and cuts may further discourage participation in the program, which primarily serves low-income children, disabled adults and nursing home residents.
In Kansas, a 10 percent cut in provider payments that took effect on Jan. 1 has prompted such an outcry that Gov. Mark Parkinson, who imposed it, now wants to restore the money by raising tobacco and sales taxes.
Even if Mr. Parkinson, a Democrat, overcomes resistance in his Republican-controlled Legislature, it will be too late for Dr. C. Joseph Beck, a Wichita ophthalmologist who informed his Medicaid patients last month that he could no longer afford to treat them.
Dr. Beck said that over eight months last year, his practice wrote off $36,000 in losses from treating 17 Medicaid patients. The state-imposed payment cut, he said, was “the final straw.”
“I’m out, I’m done,” Dr. Beck said in a telephone interview. “I didn’t want to. I want to take care of people. But I also have three children and many employees to take care of.”
Concerns about health care costs are likely to dominate the winter meeting of the National Governors Association, which begins Saturday in Washington.
In advance of the gathering, administration officials have urged governors to endorse President Obama’s health care proposals, or at least to avoid criticizing them. The Democratic plan, which is stalled in Congress, would vastly expand eligibility for Medicaid as one means of reducing the number of uninsured.
But many governors said they were more concerned about the growth of existing health programs. The recession and high unemployment have driven up enrollment in Medicaid while depleting state revenues that help pay for it.
A survey released Thursday by the Kaiser Family Foundation found a record one-year increase in Medicaid enrollment of 3.3 million from June 2008 to June 2009, a period when the unemployment rate rose by 4 percentage points. Total enrollment jumped 7.5 percent, to 46.9 million, and 13 states had double-digit increases.
Because Medicaid enrollment often lags behind unemployment, this year’s increase could prove even greater.
The National Association of State Medicaid Directors estimates that state budget shortfalls in the coming fiscal year, which begins in July in most states, will total $140 billion. Because Medicaid is one of the largest expenditures in every state budget, and one of the fastest-growing, it makes an unavoidable target.
“For most states, the fiscal situation is still dire, and the Medicaid cuts are significant,” said Scott D. Pattison, executive director of the National Association of State Budget Officers.
Governors and legislators have managed to defer the deepest cuts because the federal stimulus package provided $87 billion to states in Medicaid relief. The cost of Medicaid is shared by the federal and state governments, with states setting eligibility, benefit and reimbursement levels within broad federal guidelines, and Washington covering the majority of the expense.
But the stimulus assistance is due to expire at the end of December, in the middle of many states’ fiscal years, leaving budget officials to peer over a precipice. Congress and the White House are considering extending the enhanced payments for six more months, at a cost of about $25 billion.
The House has passed such a measure and Mr. Obama included it in his budget this month, but the Senate has not acted.
The extension would not come close to filling the Medicaid gap in many states. In Georgia, for instance, Gov. Sonny Perdue assumed in his budget proposal that the additional federal money would be provided, but that the state would still face a Medicaid imbalance of $608 million, said Dr. Rhonda M. Medows, the commissioner of community health.
Mr. Perdue, a Republican, decided it would be unwise to cut optional benefits because that might drive Medicaid patients into expensive emergency rooms. He proposed instead to levy a 1.6 percent tax on hospital and managed care revenues and to cut payments to many providers by nearly 2 percent.
Without the tax increases, which face opposition in the General Assembly, the state will have to cut provider payments by 16.5 percent, Dr. Medows said.
“I won’t have any primary care doctors left, much less specialists,” she said. “Certainly down here nobody likes to talk about taxes, but sometimes you have to bite the bullet and do what’s right for a whole lot of people.”
In the Kaiser survey, almost every state reported that Medicaid enrollment for the current fiscal year was exceeding expectations, making midyear budget cuts necessary.
The options are limited by several realities. To qualify for Medicaid dollars provided in the stimulus package, states agreed not to tighten eligibility for low-income people. And any time a state cuts spending on Medicaid, it loses at least that much in federal matching money.
Despite the ban on restricting eligibility, hard-hit states like California and Arizona are considering proposals by their governors that would remove hundreds of thousands from the rolls once the federal financing ends. Gov. Jan Brewer of Arizona, a Republican, has called for eliminating Medicaid coverage for 310,000 childless adults and ending the Children’s Health Insurance Program to help close a two-year budget gap of about $4.5 billion.
Gov. Phil Bredesen of Tennessee, a Democrat, is proposing the largest cuts in the history of TennCare, his state’s Medicaid program. To trim 9 percent of the TennCare budget, he would establish a $10,000 cap on inpatient hospital services for nonpregnant adults and would limit coverage of X-rays, laboratory services and doctor’s office visits.
“I have no choice,” Mr. Bredesen said.