States’ Cost-Cutting Efforts Threaten Access to Medicaid, SCHIP, Surveys Find
Ongoing state budget pressures have prompted many officials to take cost-cutting measures under Medicaid and SCHIP programs that could threaten recent increases in enrollment, according to two new 50-state annual surveys by the Kaiser Commission on Medicaid and the Uninsured, the AP/Las Vegas Sun reports. According to the reports, the number of uninsured U.S. residents grew by five million in the past four years but has been offset partially by enrollment increases in Medicaid and SCHIP. However, with state budget shortfalls expected to total $40 billion this fiscal year, many states are planning to implement additional cost-cutting measures in Medicaid and SCHIP, the reports indicate (AP/Las Vegas Sun, 10/4).
Findings from the report on Medicaid spending, based on a survey of states by Health Management Associates, include:
- Medicaid spending in FY 2004 grew 9.5% -- compared with an 11.2% increase in private health insurance premiums -- driven largely because of increases in enrollment, rising prescription drug costs and increasing overall health care costs (Kaiser Family Foundation release, 10/4).
- Because of cost pressures, every state and the District of Columbia implemented at least one cost-cutting measure in their Medicaid programs in FY 2004 and plan to do so again in FY 2005.
- Budget pressures for FY 2005 will be heightened by the expiration on June 30, 2004, of a one-time increase in federal Medicaid funds (Reuters, 10/4). The 15-month funding increase helped keep the rise in state Medicaid financing to 4.8% in FY 2004. Without the increase for FY 2005, state Medicaid spending will rise by an estimated 11.7%, according to the report (Adams, CQ HealthBeat News, 10/4). The additional funds helped resolve Medicaid budget shortfalls in 36 states in FY 2004, the report says (Reuters, 10/4).
- Thirty-eight states cut Medicaid eligibility, and 34 states limited benefits over the last four years.
- Medicaid officials in 39 states said they expect cost pressures to continue to grow in FY 2005 (Kaiser Family Foundation release, 10/4).
- Medicaid enrollment is expected to grow 4.7% in FY 2005, compared with a 5.2% increase in FY 2004 (CQ HealthBeat News, 10/4).
Findings from the report on barriers to health coverage as a result of state actions between April 2003 and July 2004, based on a survey of states by the Center on Budget and Policy Priorities, include:
- Eight states froze SCHIP enrollment at some point during the study period.
- Sixteen states' SCHIP and Medicaid programs raised premiums or expanded application of premiums to lower-income families (Kaiser Family Foundation release, 10/4). Research has shown that premiums of any size limit participation in public health programs, the report notes (AP/Las Vegas Sun, 10/4).
- Another eight states enacted stricter enrollment and retention procedures, such as reporting and verification requirements on income and age, reinstatement of personal interviews and elimination of presumptive eligibility and of 12-month continuous eligibility, according to the study (Kaiser Family Foundation release, 10/4).
"These studies show we are at risk of losing the gains in health coverage the nation has achieved for children and lower-income families," Diane Rowland, executive director of KCMU, said (AP/Las Vegas Sun, 10/4). She added, "It is clear that closing the coverage gap for low-income families will require additional federal resources if states are to expand coverage" (CQ HealthBeat News, 10/4). Vernon Smith, a principal at Health Management Associates who helped prepare the reports, said, "The pressure on Medicaid continues to be unrelenting" (Reuters, 10/4). Barbara Lyons, deputy director of KCMU, said, "The pressures are such that, for Medicaid to perform fully, it will take additional federal resources," adding, "States have tried to implement cost-containment actions ... but they are hitting the bone now" (Singer, Long Island Newsday, 10/5).
Smith and Rowland indicated that the new Medicare law "will do little to provide relief to states," according to CQ HealthBeat News. They said that the law requires states to continue to provide nearly the same level of funding to people dually eligible for Medicaid and Medicare as before the law's passage. In addition, states are concerned that new administrative tasks related to the law's implementation "could add to their burdens," CQ HealthBeat News reports. Smith said that most state Medicaid program directors reported being concerned about implementing the new law (CQ HealthBeat News, 10/4). The reports are available online.
NPR's "Morning Edition" on Tuesday reported on the studies. The segment includes comments from Donna Cohen Ross, director of outreach at the Center on Budget and Policy Priorities; Rowland; and Smith (Rovner, "Morning Edition," NPR, 10/5). The complete segment is available online in RealPlayer.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.