California Among States Mulling Medicaid Cuts in Face of Budget Deficits

In response to budget deficits, a number of states have proposed changes to their Medicaid programs that could affect the eligibility of hundreds of thousands of residents or reduce reimbursements for health care providers, the Christian Science Monitor reports.

In February, California announced a 10% reduction in Medicaid reimbursements to providers that took effect in July, and the state in May announced more potential changes to the program that included a proposal to limit eligibility to residents with annual incomes less than 61% of the federal poverty level, compared with 107% currently.

In New York, Gov. David Paterson (D) has proposed to freeze Medicaid reimbursement rates for hospitals for the remainder of 2008 and 2009. He also has proposed to reduce Medicaid reimbursement rates for hospitals by 7.2% over the next two years and impose a new tax on their revenue.

Meanwhile, Maine has added a $25 fee for adults who enroll in the state Medicaid program, and California, Arizona and other states have begun to require residents to re-enroll in their programs more often.

In addition, New Jersey has reduced funds for charity care in hospitals, and Florida has frozen Medicaid reimbursements for nursing homes.

According to the Monitor, when "state lawmakers look at their budgets, the two largest expenditures are education and Medicaid," and lawmakers often are "loath to cut education funding, especially during the school year."

Expenditures for Medicaid in 2006 reached $304 billion, a 48% increase from 2000, and enrollment in programs increased by 11% between 2000 and 2002 and by an additional 7% in 2003.

Iris Lav, deputy director at the Center on Budget and Policy Priorities, said, "Medicaid is very much in jeopardy."

Stephen Zuckerman, a health care economist at the Urban Institute, said, "This is a recurring problem states have during every recession," adding, "Last time, Congress allocated more money."

However, states might not receive additional funds from the federal government this year, according to Dan Hawkins, policy director for the National Association of Community Health Centers. He said, "There is good support for fiscal relief by several key members of Congress," adding, "But it all depends on whether Congress does a second fiscal stimulus package, and that is looking increasingly doubtful with President Bush saying he would veto any more fiscal stimulus" (Scherer, Christian Science Monitor, 8/15).

On Thursday, KQED's "The California Report" included a segment addressing the effects of a Medi-Cal payment freeze on health care providers in California (Fenston, "The California Report," KQED, 8/14).