State governments are planning significant cuts to Medicaid as they face ongoing budget deficits and federal restrictions against limiting the program's eligibility requirements, the New York Times reports. The federal health reform law (PL 111-148) requires states beginning in 2014 to expand Medicaid eligibility, leading to an increase of 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 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 -- in order to reduce expenditures during current budget cycles.
States that are planning significant Medicaid cuts include:
Arizona, where Gov. Jan Brewer (R) recently requested a waiver from a reform 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 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, like Texas, are considering withdrawing from Medicaid entirely. Texas lawmakers ultimately decided that the loss of federal matching funds made the strategy impractical.
According to the Times, some states have decided to take advantage of certain health reform law 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).
At the same time, 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 that 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 (Serafini/Appleby, Kaiser Health News, 1/30).
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