States Weigh Medicaid Cuts Because of Budget Gaps, Lower Federal Aid
State governments are planning significant cuts to Medicaid as they face ongoing budget deficits and federal restrictions against limiting the programâs eligibility requirements, the New York Times reports.
The federal health reform law requires states beginning in 2014 to expand Medicaid eligibility. The Medicaid program is expected to add 16 million beneficiaries by 2019. The federal government will cover the cost of the expansion through 2016, but states will be responsible for 10% of expansion costs by 2020.
Meanwhile, additional federal aid for Medicaid granted by the 2009 economic stimulus package will end in July, causing an increase of one-fourth to one-third in each state's share of program costs, according to the Times.
At the same time, states are facing an estimated $125 billion in combined deficits. As a result, states are trying to cut costs significantly by eliminating benefits that are not federally required, reducing health care provider payments and raising taxes on providers.
According to the Times, some states also are cutting benefits that will be required under the Medicaid expansion -- such as prescription drugs and mental health treatment -- to reduce expenditures during current budget cycles.
The states that are planning significant Medicaid cuts include:
- Arizona, where Gov. Jan Brewer (R) recently requested a waiver from a reform law provision so that the state can drop 280,000 adults from its Medicaid program;
- California, where Gov. Jerry Brown (D) has proposed cutting $1.7 billion from Medicaid through measures that would limit beneficiaries to 10 physician visits annually and six prescriptions monthly, among other things;
- New York, where Gov. Andrew Cuomo (D) plans to propose cutting $2 billion from Medicaid spending;
- Georgia, where Gov. Nathan Deal (R) proposed ending coverage of dental, vision and podiatry treatments for adults; and
- South Carolina, where lawmakers are considering ending hospice care.
Meanwhile, states such as California, Texas and others are weighing further reductions of up to 10% in health care provider payments, despite the fact that some physicians already have left the program because of low reimbursement. Some states also might increase copayments for beneficiaries or expand managed care plans to control costs.
In addition, certain states are even considering withdrawing from Medicaid entirely. In Texas -- one of the states that considered withdrawing from the program -- lawmakers ultimately decided that the loss of federal matching funds makes the strategy impractical.
However, not all states are seeking Medicaid cuts. According to the Times, some states have decided to engage with certain health reform provisions early to draw down additional federal funds or apply for waivers from certain measures. For example, Minnesota officials are set to expand Medicaid eligibility to certain childless adults before 2014 to secure more federal money (Sack, New York Times, 1/28).
Some States Might Choose To Ignore Health Reform Requirements
Some state officials are considering whether to ignore the Medicaid expansion requirements in the overhaul, Kaiser Health News reports.
Matt Salo, director of the Health and Human Services Committee of the National Governors Association, said staff members for certain state governors are warning members of Congress that unless greater federal aid comes to states, they will disregard the new Medicaid eligibility rules and reduce eligibility. If governors embraced such a strategy, the federal government would have to determine whether it would eliminate Medicaid funding entirely for those states.
Democrats, Reform Proponents Consider Solutions
Democrats are considering ways to help states maintain their Medicaid programs.
For example, Senate Finance Committee Chair Max Baucus (D-Mont.), Senate Health, Education, Labor and Pensions Committee Chair Tom Harkin (D-Iowa) and House Minority Leader Nancy Pelosi (D-Calif.) favor a proposal extending until 2014 the extra Medicaid funding granted through the stimulus package.
However, Republicans oppose such a move, citing the need to reduce the federal deficit. Harkin said he also is considering a proposal for the federal government to take over Medicaid completely, rather than sharing it with states.
CMS Administrator Donald Berwick said states' best course of action is to pursue federal money already available to them under the reform law by implementing various overhaul proposals, such as establishing health insurance exchanges. He also said the agency plans to recommend how states can lower costs by improving care.
Dan Mendelson, CEO of Avalere Health, said one way states could lower Medicaid costs is by having the federal government pay the nursing home costs of Medicaid beneficiaries who also are eligible for Medicare (Serafini/Appleby, Kaiser Health News, 1/30).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.