Most States Are Cutting Medicaid Benefits, Study Says

By THE ASSOCIATED PRESS

NY Times, January 13, 2003

WASHINGTON (AP) -- States facing tight budgets and growing Medicaid costs are cutting back on prescription drugs and dental care while increasing co-payments for people who use the program, an independent study released Monday says.

The study found that all states except Alabama have cut spending or plan to cut spending this year on Medicaid, the health insurance program that serves 42 million poor, disabled and elderly Americans. That includes 32 states that made cuts when the fiscal year began last summer and have found it necessary to cut yet again.

``For most states, there aren't any easy solutions left,'' said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured, which released the study.

Based on a 50-state survey, her group found that 45 states plan tighter controls on payments for prescription drugs, 37 states plan to reduce or freeze payments to doctors and hospitals, 27 states plan to restrict eligibility for the program, 25 states plan to cut benefits such as dental or vision care and 17 states plan to increase co-payments required of beneficiaries.

That's on top of similar cuts made last year.

On average, Medicaid spending is projected to grow by 9 percent this year, almost twice as fast as legislatures assumed when writing their 2003 budgets, the survey found.

Overall, states are facing massive budget shortfalls totaling at least $60 billion going into the next fiscal year. Medicaid makes up an average of 15 percent of state budgets.

Legislation introduced last week would provide $10 billion immediately to help states with Medicaid costs. A similar bill, sponsored by Sens. Susan Collins, R-Maine, and Jay Rockefeller, D-W.Va., was approved easily last year by the Senate but never passed the House.

During the fiscal crisis of the early 1990s, states were more willing to cut spending on education and to raise taxes than they are now, which puts Medicaid at particular risk, said John Holahan of the Urban Institute, who authored a companion study looking in depth at seven states.

In addition, in the early '90s, states had one-time options that are no longer available, such as funneling patients into cost-saving managed care plans.

Cutting Medicaid spending is particularly painful for states because the program is financed jointly by state and federal governments. That means states forgo federal money with every Medicaid dollar they cut from state budgets.

Medicaid covers 30 million people in low-income families, including one in five U.S. children. It also provides health and nursing home payments for 7 million people with disabilities and supplements Medicare for 6 million elderly living in poverty.

While most beneficiaries are children and their parents, the bulk of the money is spent on the elderly and disabled.

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