States Brace for
End of Extra Payments for Medicaid
Published: June 15, 2011 - New York Times
WASHINGTON — Faced with a deepening recession
two years ago, the Obama administration injected billions of dollars into Medicaid,
the nationfs low-income health program. The money runs out at the end of this
month, and benefits are being cut for millions of people, even though
unemployment has increased.
From New Jersey to California, state officials are bracing for the end to
more than $90 billion in federal largess specifically designated for Medicaid.
To hold down costs, states are cutting Medicaid payments to doctors and
hospitals, limiting benefits for Medicaid recipients, reducing the scope of
covered services, requiring beneficiaries to pay larger co-payments and
expanding the use of managed care.
As a result, costs can be expected to rise in other parts of the health care
system. Cuts in Medicaid payments to doctors, for example, make it less likely
that they will accept Medicaid patients and more likely that people will turn to
hospital emergency rooms for care. Hospitals and other health care providers
often try to make up for the loss of Medicaid revenue by increasing charges to
other patients, including those with private insurance, experts say.
Neither the White House nor Congress has tried to extend the extra federal
financing for Medicaid, even though the number of beneficiaries is higher now
than when Congress approved the aid as part of an economic recovery package in
February 2009.
The Congressional Budget Office estimates that federal Medicaid spending will
decline in 2012 for only the second time in the 46-year history of the program.
But states say they will have to have to spend more on Medicaid as they struggle
to make up for the loss of federal money.
State officials say they are resigned to the loss of the extra federal
matching payments, given the climate in Congress, where deficit reduction is a
paramount goal.
gWe all see the reality of whatfs going on in Congress,h said Mark W. Rupp,
director of the Washington office of Gov. Christine Gregoire of Washington
State, a Democrat who is chairwoman of the National Governors Association. gItfs
more about cutting than spending. Why put a lot of effort into something that
did not seem likely to have a positive outcome? It would have been fairly
futile.h
Although Medicaid provides health
insurance to one in five Americans at some point in a year, it is more
vulnerable to cuts than Medicare
and Social
Security, which have broader political support.
gMedicaid is very much on the chopping block,h said Senator John D.
Rockefeller IV, Democrat of West Virginia and chairman of the Senate Finance
Subcommittee on Health Care. gSeniors vote. But if you are poor and disabled,
you might not vote, and if you are a child, you do not vote — thatfs a lot of
Medicaidfs population. They donft have money to do lobbying.h
Medicaid is financed jointly by the federal government and the states, with
the federal government paying a larger share in poorer states like Mississippi
and West Virginia and a smaller share in higher-income states like New York and
Connecticut.
The aid ending next month increased the federal share of Medicaid spending in
all states, with additional help for states where unemployment rates had risen
sharply. The extra aid was scheduled to expire last December, but Congress
extended it for six months at the urging of the White House and state officials.
The additional money pushed the average federal share of Medicaid spending
nationwide to 67 percent. It will revert to 57 percent next month. The cutback
in federal Medicaid money has put pressure on states to cut the budget for other
programs, including education and social services.
Toby J. Douglas, director of the California Department of Health Care
Services, said the federal Medicaid cut was causing gvery consequential
reductions in health care and other public programs.h
California is cutting Medicaid payments to doctors and many other providers
by 10 percent; has established new co-payments for drugs, doctorsf services and
hospital care; and will limit beneficiaries to seven doctorfs office visits a
year unless a doctor certifies a need for more.
With 7.6 million Medicaid beneficiaries — 50 percent more than any other
state — California faces bigger problems, but its response has been typical. A
survey issued this month by the National Association of State Budget Officers
found that 24 states were reducing Medicaid payments to providers, while 20 were
limiting benefits in some way.
R. Andrew Allison, who is executive director of the Kansas Health Policy
Authority and president of the National Association of Medicaid Directors, said
Medicaid was gobbling up new revenues as states recovered slowly from the
recession.
Kansas illustrates the predicament most states are facing. Federal Medicaid
payments in Kansas are expected to decline by more than $250 million, or 13
percent, in the statefs new fiscal year, which starts July 1, Mr. Allison said.
But the amount of state revenue spent on Medicaid is expected to increase by
more than $300 million, or 39 percent.
New York has just imposed a cap on state Medicaid spending, with a separate
limit for each sector like hospitals, nursing
homes and managed care plans. Under a new state law, if it appears that the
state share of Medicaid spending will exceed the cap, New York officials must
devise and carry out a plan to reduce spending, by modifying benefits, provider
payment rates or other features of the program.
gThis is an enormous sea change for Medicaid,h said Jeffrey Gordon, a
spokesman for the New York State Health Department.
In New Jersey, Gov. Chris Christie, a Republican, said, gMedicaidfs growth is
out of control,h and he has proposed numerous changes gto fill in the hole
created by the loss of over a billion dollars of federal stimulus moneyh for the
program. He would tighten eligibility, reduce Medicaid payment rates for nursing
homes, move older and disabled Medicaid recipients into managed care, and charge
co-payments for medical day care services.
The New Jersey Legislature appears likely to accept some of the changes in a
budget to be adopted this month.
Connecticut has avoided major cuts in Medicaid, but the State Legislature has
set new limits on vision and dental coverage for adults.