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Medicaid News
States Ask Feds for Health Care Help with Medicaid
and SCHIP
This report by Statline.org, published November 26,
explains the health care crisis faced by many states as more of the
burden for Medicaid, SCHIP move to them
By Pauline Vu, Stateline.org Staff Writer
Dec. 3, 2008 - In Utah, lawmakers have ended some physical
therapy, vision and hearing services offered under Medicaid, the
national health insurance program that serves 59 million needy. Nevada
has capped enrollment in its state children’s health insurance program (SCHIP).
California, looking at a potential budget hole of more than $28 billion,
is also considering freezing enrollment in its children’s program — for
the first time in the program’s 10-year history.
As the economy worsens, states are seeing boosts in
enrollment in Medicaid and SCHIP while they struggle with their own
fiscal problems. They’re asking for relief from the federal government
to prevent cutting benefits and people from these programs.
If federal help doesn’t arrive soon, things could
get worse for poor people who depend on public health insurance, say
state officials and health care advocates.
“Medicaid and SCHIP are on the brink of
deteriorating. The question is, are we going to step up and inject money
into those programs so they can work during the downturn, or are we
going to let them deteriorate?” said Jocelyn Guyer, the deputy executive
director of Georgetown University’s
Center for Children and Families.
States are asking for two things in particular.
First is reauthorization and expansion of SCHIP,
the federal program that gives states money to provide health insurance
for children in families that earn make too much to qualify for
Medicaid. In 2007, Congress twice passed expansions of the program with
significant bonuses for states to cover more kids, only to see both
bills vetoed by President Bush. As a result, Congress extended the
program, which must be reauthorized before it expires on March 31.
States are also asking for a temporary increase in
the federal share of the joint federal-state Medicaid program, which
annually costs the states and federal government $330 billion.
With the election of Barack Obama, states could get
both wishes. The president-elect’s proposed health care plan calls for
expanding both programs and includes a mandate that all children be
covered.
Obama’s reported pick of former Senate Democratic leader Tom
Daschle to head the Health and Human Services department is seen as
further evidence of Obama’s determination to get a health care bill
through Congress.
The question may be which issue the 111th Congress
takes up first. State officials are calling for an increase in federal
Medicaid support to pass as soon as possible.
The National Governors Association sent a
letter to congressional leaders in October emphasizing that
additional Medicaid money would allow states to “continue services for
those with the greatest need.” The governors say an infusion of $20
billion a year for two years in federal funds for Medicaid would help
states through this crisis.
Proponents argue that a stimulus is necessary
because Medicaid is tied to the economy. A 1 percent increase in
unemployment leads to an increase of 1.1 million uninsured and 1 million
more on the Medicaid and SCHIP rolls.
The Center for Children and
Families
estimates that over the last year, 4.1 million people have lost
employer-based health coverage. But at the same time, a shaky economy
means states have fewer dollars to spend on such programs.
“Families are becoming uninsured because they’re
losing their jobs or can’t keep up with premiums … and at the same time,
you’ve got states with not enough money to provide that coverage,” said
Rachel Klein, deputy director of health policy at
Families USA, a group that advocates for expanding health care.
“It’s incredibly important that we get this funding to the states.”
According to a
report released Nov. 25 by Families USA, 8.6 million children, or 1
in 9, lacked health coverage in 2007. That number was tallied before the
economic meltdown.
 So far, signs from the incoming administration and
Congress are promising on SCHIP. Both House Speaker Nancy Pelosi and
Obama’s new chief of staff, Illinois U.S. Rep. Rahm Emanuel, have said
SCHIP renewal will be one of the first issues the next Congress
considers.
Most states are waiting for the federal government
to act before they decide what to do with their programs. Kansas, for
example, has plans to expand children’s coverage that is set to take
effect next year, but that’s contingent on new federal funding.
In the meantime, some states are curtailing their
SCHIP programs. Georgia is considering freezing enrollment and
increasing premiums by 10 percent next year; Nevada already did both
this year.
If California also freezes SCHIP enrollment as it’s
considering, up to 162,000 eligible children there may be denied
coverage in the first half of next year.
On the Medicaid side, several states have been
cutting or freezing reimbursement rates to health care providers, among
them California, Nevada, New York, South Carolina and Utah.
Some states are saving money by paring the recipient rolls through added
requirements. Arizona, for example, will force Medicaid patients to
re-apply for benefits more often, while California will require people
to update children’s information every six months instead of every
year. In the past, such moves have led to people dropping out of the
program.
Rhode Island is expected to remove about 1,000
adults from its Medicaid program by lowering qualifying income ceilings.
New York Gov. David Paterson (D), who recently announced that the state
budget is $2 billion short, called for more freezes in reimbursement
rates for hospitals and cuts of more than $500 million from Medicaid.
California is especially struggling. This year, the
Legislature rejected several plans to cut Medicaid benefits, but with
the state’s large shortfall, those cuts are back on the table. That
includes a plan to reduce parents’ eligibility from 103 percent of the
poverty line to 72 percent; a proposal to eliminate most coverage for
legal immigrants; and another to reduce dental, vision and podiatry
benefits.
“States have made reductions, and we always start
with the easier reductions. And now states are going to the much more
difficult reductions that directly affect people in the program,” said
Stan Rosenstein, the administrator of California’s Medicaid program. “It
could very well increase the number of uninsured and destabilize the
safety net.”
Insight into what lies ahead for states could be
gleaned from the past. The only time Congress enacted a temporary
increase in federal Medicaid aid was in March 2003 to help states during
the recession after the Sept. 11 attacks. That $10 billion — part of a
$20 billion total package in general aid for states — was 2.95 percent
above states’ usual federal allotment and lasted 15 months.
At the time, states were making big Medicaid cuts.
Every state froze or reduced payments to medical providers such as
doctors or hospitals. Others cut back on benefits; in 2002,
Massachusetts cut dental services, which led to 100,000 fewer adults
receiving dental benefits in 2004 than in 2001.
Some states increased premiums, and several cut the
number of eligible people or considered it.
But the emergency federal Medicaid aid five years
ago came with the condition that states not cut people from the rolls. A
proposal in Alabama to reduce eligibility for some seniors and people
with disabilities was dropped because it would have disqualified the
state for the extra money. Ohio’s legislature ended plans to cut
Medicaid coverage, while Massachusetts restored coverage for about
36,000 unemployed adults.
At least 22 states used the extra money to avoid,
lessen or postpone Medicaid cutbacks; about five states restored
previous cuts or expanded the program.
The federal increase in 2003 was considered such a
success that U.S. Sen. Max Baucus (D) of Montana proposed in a recent
health care reform white paper that increases in the federal Medicaid
match happen automatically during recessions.
In this recession, however, states appear to be
heading toward bigger budget shortfalls. In 2003 Congress allocated only
$10 billion in Medicaid money; in this year’s failed proposals, the
House proposed $14.4 billion while the Senate proposed $19.6 billion,
figures that are already likely lower than what states now need.
Also, since this downturn follows so quickly on the
heels of the last one, states have fewer options for where to save
Medicaid money.
“So many states made cuts in the last downturn …
it’s unclear how far they can go without jeopardizing provider
participation and access,” said Robin Rudowitz, a principal policy
analyst for the nonpartisan
Kaiser Commission on Medicaid and the Uninsured.
See Related Stories at Stateline.org:
States eye their share of federal bailout (11/25/2008)
States craft plans to stimulate economy (11/14/2008)
What Obama could do for states (11/6/2008)
Medicaid rolls, spending up in bleak economy (9/30/2008)
Census — Uninsured down, poverty up (8/26/2008)
Medicaid directors object to SCHIP rules (8/23/2007)
Big questions loom in SCHIP fight (8/6/2007)
Medicaid: Biggest insurer is a budget buster (8/3/2006)
Contact Pauline Vu at
pvu@stateline.org.
For more information and daily news pertaining to
states, visiting Stateline.org, published by the Pew Center on the
States. Click here to home page.
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