By Amy Goldstein
Washington Post Staff Writer
Friday, February 19, 2010; A04

The recession has fueled the greatest influx of Americans onto Medicaid since the earliest days of the public insurance program for the poor, according to new findings that show caseloads have surged in every state.

More than 3 million people joined Medicaid in the year that ended in June, the data released Thursday show. That pushed enrollment to a record 46.8 million, exacerbating the financial strains on already burdened states and complicating the federal politics of health care.

The analysis by the Kaiser Family Foundation, a health policy and research organization, found that in three-fifths of the jurisdictions, including Maryland and the District, people rushed into the safety net for health coverage at more than twice the rate as the year before.

Medicaid directors said in interviews that despite early clues elsewhere that the economy may be starting to improve, the demand for government health coverage has not tapered off since last summer. "Nope. It hasn't slowed down yet," said John Folkemer, deputy secretary for health-care financing for Maryland, where the caseload rose by 20 percent from June 2008 to June 2009, the steepest increase in the country.

Like the rising demand for food stamps and welfare benefits, the increase in people turning to Medicaid reflects the millions of Americans who have lost jobs and economic self-reliance and are asking the government for basic help, in many instances for the first time.

Because the program is large and expensive, the spurt in Medicaid caseloads has produced far more damaging effects on state budgets than the other two programs. In the past year or two, many states have responded by reducing the medical services available to Medicaid patients or payments to doctors, hospitals and other providers of health care.

Now, 29 states are considering further reductions or have made them since their current fiscal year began, Thursday's report said. Such strains exist even though the federal government has been giving states extra money for Medicaid as part of the economic stimulus efforts Congress set in motion a year ago. The extra subsidies are due to expire at the end of this year, and states are lobbying hard to continue them for at least six months.

The worsening financial burden imposed by Medicaid also has heightened some governors' wariness about the approach to redesigning the nation's health-care system that is favored by the White House and congressional Democrats. In the health-care bills passed by the House and the Senate, an expansion of health coverage to the uninsured would rely substantially on Medicaid. If the legislation were enacted, the federal government would pick up the cost for the first few years, but, after that, states would contribute a small portion.

"Reform is needed, but, gosh, the hard nut to crack is, how do you fund it?" said Charles Duarte, the administrator who oversees Medicaid in Nevada, where the caseload rose 13 percent in the year that ended in June.

Medicaid, created as part of the Great Society policies of the mid-1960s, is a shared responsibility of the federal government and states. The federal government pays part of the cost, depending on each state's wealth, and requires a certain level of coverage, but states are free to set many of their program's rules, including whether to furnish additional benefits.

In the Washington area, which has many low-income residents who have long relied on government help, the Medicaid rolls rose by 4 percent, compared with a 1 percent increase a year earlier. Virginia's caseload increased by 8 percent, compared with slightly more than 4 percent the previous year.

In Maryland, Folkemer, the Medicaid director, said that perhaps two-fifths of more than 100,000 extra people in the program signed up because of a change in summer 2008 that allowed more parents to enroll. But most of the increase, he said, "was because of the economy."

Maryland is one of a few states in which, even during the economic downturn, policymakers have tried to broaden access to public insurance. Wisconsin Gov. Jim Doyle (D) said that in the past four years, the state has taken steps to expand BadgerCare, as the state calls both Medicaid and its version of the State Children's Health Insurance Program. "We have continued on, even in the face of the economic crisis," Doyle said in an interview, so that Wisconsin now has the nation's second-lowest portion of uninsured residents, after Massachusetts.

In most states, however, the growth of Medicaid is a result of economic bad times. By the end of 2009, Nevada's Medicaid rolls had shot up 20,000 above the 220,000 the state had forecast, Duarte said. Next week, he said, the state's legislature, faced with revenue far lower than expected from gambling and sales, will hold special sessions to cut the budget.

Last summer, Duarte said, he was able to restore several reductions in benefits the legislature had cut not long before, including vision coverage and some dental care for adult Medicaid patients. Now, he said, as legislators look for new cuts, that list of services "is back on the table, with more added to it."