Almost Every State Facing ‘Fiscal Crisis,’ Could Impact Medicaid Programs, NGA Report Says
Almost every state in the nation is "in fiscal crisis," a problem that could prompt many to reduce Medicaid spending, according to a National Governors Association report released yesterday, the New York Times reports. According to the report, "Fiscal Survey of the States," in the most recent fiscal year, states' coffers decreased to $14.5 billion from a peak of $48.8 billion in 2000. Medicaid and other health care costs account for 30% of states' spending, and those expenses rose 13% last year, the "largest increase in a decade," according to the report (Pear, New York Times, 11/26). NGA Executive Director Raymond Scheppach said, "This is the worst budget crisis states have faced since World War II." States now spend more on Medicaid than any other program except education, the Los Angeles Times reports. Already, 37 states have cut a combined $12.6 billion from their budgets, and more spending reductions are likely, according to the report. Al Jackson, vice president for political affairs at the American Hospital Association, said, "Any state with a fiscal problem is going to be cutting their Medicaid program next year" (Brownstein et al., Los Angeles Times, 11/26).
According to the Kaiser Commission on Medicaid and the Uninsured, 18 states plan to tighten Medicaid eligibility rules during fiscal year 2003, compared to eight states in FY 2002. In addition, 15 states are cutting services this fiscal year, compared to nine last year, and 40 states are reducing the amount they will pay for prescription drugs or implementing preferred drug plans. Some states also are cutting back on programs designed to enroll more people who are eligible for Medicaid and to make it easier for them to retain coverage once enrolled (California Healthline, 10/11). The possibility of additional cuts is an "ominous prospect," as the number of people with private health insurance last year fell by 1.2 million last year, and more people enrolled in Medicaid, the Los Angeles Times reports (Los Angeles Times, 11/26). Scheppach said, "States have already done everything that was easy. From here on, it will be Draconian." Utah Gov. Mike Leavitt (R) said, "We've saved, we've scrimped. We've nipped and tucked. We've reprioritized and we've spent our rainy-day fund, and we're still not there" (Cauchon/McMahon, USA Today, 11/26).
Although states could receive some financial assistance from the federal government, some analysts say it is unlikely they will "obtain nearly as much help as they are requesting," the Los Angeles Times reports. The Senate in July approved a provision as part of a larger bill (S 812) on generic drugs that would have increased the federal share of Medicaid costs by $6 billion over 18 months. However, the bill stalled in the House, which approved a measure proposed by the Bush administration that would have given states $3 billion in "one-time grants" to help cover the uninsured, the Times reports. Kenneth Finegold, senior research associate at the Urban Institute, said, "The general picture is, don't count on anything from the feds, because the federal government now has a deficit, and it also has other priorities [besides health care]. National security and tax cuts are priorities of this administration, and balancing state budgets are not" (Los Angeles Times, 11/26). The NGA report is available online. Note: You will need Adobe Acrobat Reader to view the report.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.