Despite Budget Deficits, States Have ‘Mostly’ Refrained from Cutting Medicaid, CHIP Eligibility
While many states have reduced spending and considered tax increases to compensate for budget deficits, states have mostly refrained from cutting enrollment in their Medicaid and CHIP programs, according to a new study. The report, written by Urban Institute researchers and published on Health Affairs' Web site, evaluated 13 states -- Alabama, California, Colorado, Florida, Massachusetts, Michigan, Mississippi, New Jersey, New York, Texas, Washington and Wisconsin -- that have been studied through the institute's Assessing the New Federalism project. It found that while the states, many of which expanded their health insurance programs during the 1990s, have reduced or frozen provider reimbursements, limited outreach efforts and eliminated some optional benefits in response to the economic downturn, they generally have not reduced eligibility in their Medicaid and CHIP programs. Even if states continue to face budget pressures, eligibility cuts are unlikely, the report states, because of the loss in federal matching funds that would result, minimum federal standards for eligibility and the "political strength of providers and beneficiaries." However, the study cautions that the funding pressures on CHIP and Medicaid programs -- higher provider payments, rising health costs and lower savings from managed care -- will likely continue even after the economy rebounds (Urban Institute release, 5/22). The report concludes, "States will have to work hard just to maintain current coverage commitments, and it seems unlikely that they will go much further in extending coverage. ... The current system may be reaching its limits, and there are good reasons to believe that states will struggle greatly in the foreseeable future" (Holahan et al., "Health Policy for Low-Income People: States' Responses to New Challenges," May 2002). The study is available online.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.