Most States Are Cutting Medicaid Benefits, Study Says
By THE ASSOCIATED PRESS
Filed at 4:22 p.m. ET
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
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
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
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
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.