Current Medicaid Cuts Could Curb Benefits for New Enrollees in 2014

Twenty-four states are planning to cut at least $4.7 billion from their Medicaid programs, which could result in fewer benefits for the millions of individuals expected to enroll in the program when the federal health reform law expands eligibility in 2014, according to data from separate analyses by the Center on Budget and Policy Priorities and Families USA, Reuters reports.

The data indicate that the funding cuts would reduce reimbursement rates by up to 15% for physicians, hospitals and other health care providers. Further, beneficiaries would face higher copayments and could lose optional benefits for preventive care, vision and dental services.

Texas, Florida, Massachusetts and Maryland already have enacted large-scale cuts, which will have additional effects on their budgets because federal disbursements are tied to state spending levels (Morgan, Reuters, 8/11).

Spotlight on Health Care Cuts

The analyses come after a recent report by the National Association of Children's Hospitals and Related Institutions found that 10 states have already enacted laws to lower reimbursement rates for inpatient, outpatient or physician services and that seven states have passed laws to limit benefits or increase cost sharing (California Healthline, 8/11).

Further, Medicaid could face additional cuts at the federal level, as congressional negotiators look for cuts under the recent debt deal (Reuters, 8/11). Under that agreement, House and Senate leaders will establish a bipartisan, bicameral panel to develop and pass by the end of November a package of $1.5 trillion in federal spending cuts over 10 years.

Failure by Congress to enact further spending reductions at the end of this year would trigger a series of automatic cuts of as much as $1.2 trillion. If the triggers are engaged, Medicaid is exempted from spending cuts. However, the deficit panel is not bound by those stipulations, and could cut Medicaid (California Healthline, 8/8).

Possible Effects of Medicaid Cuts

The mounting budget pressures could restrict access to health care services for Medicaid beneficiaries and prompt physicians, clinics and hospitals to restrict or eliminate access for enrollees.

Gary Kalkut, chief medical officer at Montefiore Medical Center, said, "At some point, more cuts will impair the delivery of services."

Mike Leachman of CBPP said, "The provider rate cuts are going to mean that fewer providers will offer Medicaid services by the time we get to 2014, and that’s bad. It pulls in the opposite direction of where health care reform [is] trying to go."

The Obama administration currently is working with more than 12 states to develop plans to control costs and eliminate inefficiencies in their Medicaid programs. Meanwhile, federal officials note that Medicaid's expansion in 2014 will coincide with additional federal funding for state budgets (Reuters, 8/11).