13 States Cut Medicaid To Balance Budgets

By Phil Galewitz and Matthew Fleming

Jul 24, 2012 - Kaiser Health News

This story was produced in collaboration with USA TODAY.

Thirteen states are moving to cut Medicaid by reducing benefits, paying health providers less or tightening eligibility, even as the federal government prepares to expand the insurance program for the poor to as many as 17 million more people.

States routinely trim the program as tough times drive up enrollment and costs. But the latest reductions – which follow more extensive cuts last year -- threaten to limit access to care for some of its 60 million recipients.

"With more people on Medicaid, states will have to continue to ratchet down payments and limit services," says Nina Owcharenko, director of the center for health policy studies at the conservative Heritage Foundation.

Some worry the cuts to doctors and hospitals could make it more difficult to expand the state-federal program in 2014, as called for by the federal health law. "Some providers may be unwilling to accept new Medicaid patients," says former New York Medicaid Director Deborah Bachrach.

But she notes the law may counter that effect with its funding boosts to community health centers and its temporary rate increases for primary care doctors beginning in January 2013.

Most of the cuts went into effect this month, according to a 50-state survey by Kaiser Health News for USA Today. Among them:

--Illinois cut enrollees to four prescriptions a month; imposed a copay for prescriptions for non-pregnant adults; raised eligibility to eliminate more than 25,000 adults and eliminated non-emergency dental care for adults.

--Alabama cut pay for doctors and dentists 10 percent and eliminated coverage for eyeglasses.

--Florida cut funding to hospitals that treat Medicaid patients by 5.6 percent – following a 12.5 percent cut a year ago. The state is also seeking permission to limit non-pregnant adults to two primary care visits a month unless they are pregnant, and to cap emergency room coverage at six visits a year.

--California added a $15 fee for those who go to the emergency room for routine care and cut reimbursements to private hospitals by $150 million.

--Wisconsin added or increased monthly premiums for most non-pregnant adults with incomes above $14,856 for an individual.

South Dakota, Maryland, Colorado, Louisiana, New Hampshire, Hawaii and Maine also are making reductions to their programs. Connecticut is weighing cuts likely to go into effect this fall.

A few states have increased Medicaid benefits, including Arizona, which will boost pay for mental health providers next April. And some are looking at restoring cuts made during the worst of the recession, said Vernon Smith, managing principal with consulting firm Health Management Associates and a former Michigan Medicaid director.

Stacey Mazer, senior staff associate with the National Association of State Budget Officers, notes that fewer states are cutting the program this year, partly because many are in better economic shape and partly because "states are hearing a lot of hue and cry about the impact on access."

Last November, for instance, about 3,500 Medicaid recipients in New Hampshire had to find new doctors after cuts led LRGHealthcare in Laconia to stop offering primary care to non-pregnant adults, says Senior Vice President Henry Lipman.

"To see two decades of providing access for our community basically erased has been very disheartening," he says.

It is unclear how many states will participate in the law's Medicaid expansion since the Supreme Court ruled last month that they may not be penalized for opting out. A number of Republican governors have vowed not to participate, citing costs. Although the federal government will pay for the first three years, states will still have to cover up to 10 percent of the costs after that.