American Retired Seniors

States Making Drastic Cuts in Medicaid Coverage; Could Leave Indigent Elderly with No Options - State actions may force faster action on national health care system

January 9,2008 – The health care crisis in America may reach a boiling point faster than expected as state governments – struggling to stay out of the red in this imploding economy – are rapidly cutting the coverage they provide in Medicaid. California’s Gov. Arnold Schwarzenegger wants to stop paying for dental, psychological, optometry and other services that would leave many indigent elderly with no options for care.States Consider Further Cuts to Medicaid Programs amid Continuing Recession

The Washington Post recently examined how many states “are being forced to curtail” Medicaid services “as they struggle to cope with the deteriorating economy.” Medicaid, which provided health coverage to 50 million U.S. residents in 2007, is the largest or second-largest expense in every U.S. state, the Post reports.

According to the Post, 19 states have lowered payments to hospitals and nursing homes, eliminated coverage for some treatments and excluded some beneficiaries from the program completely. Eighteen of these states, as well as six others, are considering additional reductions for fiscal year 2010 in preparation for the possibility that additional money will not be available, the Post reports.

Many states are suspending coverage for services not required by the federal government, such as physical therapy, eyeglasses, hearing aids and hospice care, and a few states are requiring that beneficiaries pay a larger portion of the cost of their care.

The Post also examined financial issues facing the Medicaid programs of California, Maryland, Rhode Island, South Carolina, Virginia and Washington, D.C.

Diane Rowland, executive vice president of the Kaiser Family Foundation and executive director of the Foundation’s Commission on Medicaid and the Uninsured, said the financial crises facing Medicaid programs are exacerbated because of a milder recession earlier in the decade, when states implemented many “cuts that were making the program more efficient.” She added, “Now they are making … cuts to the core.”

According to the Post, governors and state legislators “have been pleading with Congress” and President-elect Barack Obama’s administration for financial help with Medicaid.

Congressional Democrats and Obama have proposed providing additional funding to the state Medicaid programs in an economic stimulus package. Lawmakers have suggested $100 billion for the programs, which would increase the portion funded by the federal government over the next two years.

In addition, some lawmakers also are considering allowing people who have recently lost their jobs to enroll in Medicaid, with the federal government paying for the entire cost of their coverage (Goldstein, Washington Post, 12/26/08).

Schwarzenegger Proposes Medicaid Cuts

Aides to California Gov. Arnold Schwarzenegger (R) on Wednesday released a proposal to address the state’s budget deficit in part by cutting funds for Medi-Cal and other health care programs, the Sacramento Bee reports (Yamamura, Sacramento Bee, 1/1).

Medi-Cal is the state’s Medicaid program. The state faces a projected $40 billion budget deficit over the next 18 months. Schwarzenegger’s plan calls for borrowing, tax increases and spending cuts to close the deficit and provide a $2 billion reserve. Schwarzenegger plans to submit his official budget language to the state Legislature this week.

Schwarzenegger proposed cutting $744.2 million from Medi-Cal spending by:

  ? Eliminating coverage for dental, psychological, optometry and other services;

  ? Limiting benefits for some documented immigrants;

  ? Increasing the income eligibility requirements to pre-2000 levels;

  ? Reducing hospital reimbursement rates by 10%; and

  ? Scaling back cost-of-living increases for county-based administration of Medi-Cal services (Sacramento Bee, 1/1).

The governor’s proposal also contains elements of state Republican lawmakers’ budget proposal, including a plan to ask state residents to approve reallocating funds for mental health services and early childhood health care and education programs to the state general fund (Yamamura, Sacramento Bee, 1/1).

The plan would shift Proposition 63 funds for mental health services to mental health managed care services. Schwarzenegger estimates that the proposal would save the state $226 million.

In addition, Schwarzenegger proposed eliminating the state First 5 Commission and shifting its funds to the state general fund for children’s programs. The move also would shift half of the funds currently held by 58 county First 5 commissions to the state general fund.

The governor projects that the plan would save the state $275 million (Sacramento Bee, 1/1). Both plans would require voter approval, likely in a special election that the governor could call this year (Yi et al., San Francisco Chronicle, 1/1).

Kaiser Daily Health Policy Report Highlights Medicaid News in Three Other States

Summaries of recent news involving Medicaid in Connecticut, Louisiana and Rhode Island appear below.

   ? Connecticut: Approximately 60,000 households with family members enrolled in HUSKY must switch from Anthem Blue Care, one of the program’s managed care providers, to a new managed care network by Feb. 1, according to letters sent by the state Department of Social Services, the Hartford Courant reports.

According to the Courant, the switch is “staunchly opposed by advocates who say the new networks” — AmeriChoice and Aetna Better Health — “don’t have enough doctors.” The switch is required following the program’s decision to end its relationship with Anthem.

According to DSS officials, Anthem’s participation in the program has prevented physicians from joining the other HUSKY plans. In March 2008, HUSKY withdrew from bidding for the program but has continued to provide coverage. As of Dec. 1, 2008, 138,126 of the state’s 343,785 HUSKY beneficiaries were covered by Anthem, but DSS spokesperson Matthew Barrett said the number likely has since declined (Levin Becker, Hartford Courant, 12/30/08).

   ? Louisiana: Gov. Bobby Jindal (R) last week proposed reducing state spending by $341 million, including some cuts to health care, the Baton Rouge Advocate reports.

Jindal’s proposal includes reducing health care spending by $118 million in part by reducing the number of prescriptions Medicaid beneficiaries can receive monthly from eight to five, unless additional prescriptions can be medically justified. The plan also calls for reductions to consultant contracts for services for individuals with developmental disabilities (Millhollon, Baton Rouge Advocate, 12/31/08).

   ? Rhode Island: The state Senate’s first task on Jan. 6 will be to vet a waiver between Gov. Don Carcieri (R) and the Bush administration that would set a $12 billion, five-year spending cap on the state’s Medicaid program in exchange for greater Medicaid spending flexibility, the AP/Boston Globe reports.

Incoming Senate President Teresa Paiva-Weed (D) last week in an interview said that the state might lack the medical resources necessary to implement the changes. She said, “It does not appear the administration has taken any of the necessary steps to prepare for implementation of the waiver,” adding, “That really is probably one of our primary concerns.”

The General Assembly must act on the waiver within 30 days of Carcieri sending the measure, which was on Dec. 19, 2008; otherwise, the measure becomes binding (Henry, AP/Boston Globe, 12/30/08).

“Reprinted with permission from kaisernetwork.org You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2006 Advisory Board Company and Kaiser Family Foundation. All rights reserved.”

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Filed under: Medicare and Health Insurance