Medicaid in Crisis as Bush Administration Tries to Shift Billions in Cost to States

Feb. 21, 2008 – Medicaid is one of those government services that most of us think we will never need. Yet, millions of senior citizens and their families have grasped for it as the last hope for access to costly long-term care, as their savings disappear. It is also the last chance for many of the uninsured at the bottom of the economic ladder to receive medical attention. The program, however, is in crisis as the Bush administration tries to move billions of dollars of cost to the states.

The states, however, are already crumbling under the burden of ever-higher healthcare costs, a poor economy and their own budget woes. In Iowa the governor reducing costs, including capping rate increases for long-term care. California’s governor is cutting over $500 million from the Medicaid program and in Congress there is an attempt to stop or delay the new effort to move more costs to the states.

Below is a roundup of major happenings the last couple of days.

Daily Reports

KaiserNetwork.org

New Medicaid Rules Will Hurt States During Economic Downturn, Critics Say

Critics of Medicaid regulations that will begin to take effect on March 3 contend that implementing the rules during an economic downturn "will only worsen the fiscal situation for already strapped state budgets," CQ HealthBeat reports.

Speaking at a forum sponsored by the Alliance for Health Reform and the Kaiser Family Foundation's Commission on Medicaid and the Uninsured, Barbara Edwards of the National Association of State Medicaid Directors said that as the economy weakens, more workers are becoming unemployed and some are enrolling in Medicaid because they have no alternatives for coverage.

Previous KaiserNet.org report with more on Bush efforts

Feb. 12, 2008 - The Bush administration over the next several months will issue new Medicaid rules that would shift billions of dollars in costs to the states, after studies from the Government Accountability Office supported its assertion that states have used questionable practices to generate more federal payments than they deserve, CQ Today reports. Click to read more...

At the same time, state revenues are declining, and states are faced with more demands for Medicaid services and fewer resources, Edwards said, adding that the timing "almost couldn't be worse for states for many reasons."

However, Dennis Smith, director of CMS' Center for Medicaid and State Operations, at the forum said that timing is not the only consideration.

"In good times people say, 'Don't rock the boat.' In tougher times they say, 'Oh no, not now,'" adding, "We think that these are good regulations that help preserve the integrity of the program" (Johnson, CQ HealthBeat, 2/19).

>>A webcast of the forum is available online at kaisernetwork.org.

California Gov. Schwarzenegger Approves Medicaid Provider Payment Rate Cuts

California Gov. Arnold Schwarzenegger (R) on Saturday approved nearly $2.2 billion in state budget cuts over the next two years to address a projected $14.5 billion state budget deficit, the Sacramento Bee reports (Lin, Sacramento Bee, 2/17).

The cuts aim to reduce state spending by $1 billion this fiscal year and by $1.2 billion in FY 2009 (Yi, San Francisco Chronicle, 2/16). The bills Schwarzenegger signed on Saturday will save about $544 million in Medi-Cal spending in FY 2008 through a 10% reduction in provider payment rates.