From The Kaiser Family Foundation:
New 50-State
Survey Finds Increased Federal Assistance Was Critical But Strained
Budgets Are Still Pressuring States To Curb Medicaid Costs.
Washington, D.C. - The number of people on Medicaid and state
spending on the program are climbing sharply as a result of the recession,
straining state budgets and pressuring officials to curb costs despite
increased financial help from the federal government, according to a survey
released today by the Kaiser Family Foundation’s Commission on
Medicaid and the Uninsured.
The annual 50-state survey of state
Medicaid officials finds that these trends are expected to continue well
into the 2010 fiscal year, with the slumping economy contributing to the
loss of jobs, private health coverage and state tax revenue at a time when
more people are seeking help from public programs. Across the country,
states estimate Medicaid enrollment grew by an average of 5.4 percent in
state fiscal 2009, the highest rate in six years, surpassing the projected
3.6 percent increase at the start of the year. Similarly, total Medicaid
spending growth averaged 7.9 percent in FY 2009, the highest rate in five
years, well above the 5.8 percent projected growth. For FY 2010, states
estimate Medicaid enrollment will grow by 6.6 percent over FY 2009 levels.
The survey finds that,
based on initial legislative appropriations, Medicaid spending across
states is expected to grow by an average of at least 6.3 percent in fiscal
2010. But officials in three-fourths of the states are concerned that those
appropriations will not be enough, leading to more budget shortfalls and
more pressures to trim services and spending.
“The recession has shown the importance of Medicaid
as a safety net for millions of Americans who have lost health coverage
when they have lost their jobs,” said Diane Rowland, executive vice
president of the Kaiser Family Foundation and executive director of the
Kaiser Commission on Medicaid and the Uninsured. “But it also has
shown the challenges for states of maintaining coverage when state revenues
drop during times of economic crisis.”
American Recovery
and Reinvestment Act (ARRA) Provides Some Fiscal Relief
The fiscal picture would
have been much worse if not for the availability of increased federal
Medicaid funding through the American Recovery and Reinvestment Act (ARRA).
The federal money, which will provide an estimated $87
billion to states through enhanced federal matching funds through December
31, 2010, helped all states, many of which are facing significant state
budget shortfalls. States used the funds to address overall budget and
Medicaid budget shortfalls, avoid cuts to providers, benefits and
eligibility and address the recession-driven growth in enrollment.ARRA also helped protect Medicaid eligibility. In order to
qualify for the money, states had to ensure that their Medicaid eligibility
standards, methodologies and procedures were no more restrictive than they
had been on July 1, 2008, seven months before the enactment of the stimulus
law. That requirement prompted 14 states to reverse new eligibility
restrictions and five states to abandon planned new restrictions.
Nearly Every State Implemented Measures To Control Medicaid
Spending
Even with federal
relief, nearly every state implemented at least one new Medicaid policy to
control spending in fiscal 2009 and 2010, the survey finds. More than any other policy area, provider payment rate
changes serve as a barometer of state fiscal conditions. Thirty-three
states cut or froze provider rates in fiscal 2009, well above the 22 that
had been expected to do so. Even more states (39) are slated to cut or
freeze rates for FY 2010. And several others are considering it. Rate cuts can jeopardize
provider participation and inhibit Medicaid enrollees’ access to
needed care. They bite particularly hard because some states have not fully
restored provider rates to levels seen before the round of cuts in the last
economic downturn from 2001 to 2004.
Several states also cut
covered benefits or imposed new utilization controls for existing benefits,
most commonly targeting dental and vision services for adults. Ten states
reported benefits restrictions for fiscal 2009 and 15 reported them for
fiscal 2010. California, Michigan and Utah instituted multiple benefit
cuts.
Pressures Illustrate Challenges And Opportunities For Medicaid
As A Cornerstone Of Health Reform
The reliance on
Medicaid during times of economic crisis, and the fiscal pressures that
follow, spotlight both the challenges and opportunities for the program in
health reform efforts. Several legislative proposals in Congress include
measures that would expand Medicaid to cover more low-income people as a
platform for larger reform.Because many states have already used Medicaid as a vehicle
to expand health coverage, Medicaid officials expressed general support for
an expanded role for the program in health reform. Even in these tight
fiscal times over half of the states in FY 2009 and FY 2010 are moving
forward with efforts to improve eligibility standards or the streamline
application processes in a bid to cover more people. Among the states
implementing the broadest reforms and eligibility expansions are Colorado,
Maryland, New York, Oklahoma and Wisconsin. However, state Medicaid officials did register concerns about
health reform, too, reflecting current state budget situations.
Three-quarters of states expressed concern that Medicaid eligibility
expansions, mandated minimum provider rates and new administrative costs
– depending on how they were financed -- could add to state fiscal
woes. Today’s report, The
Crunch Continues: An Update on Medicaid Spending, Coverage and Policy
in the Midst of a Recession – Results
from a 50-State Medicaid Budget Survey for State Fiscal Years 2009 and 2010,
is available online.
In addition, an audio press briefing on the release will be available after
6 p.m. ET today.
The
Kaiser Family Foundation is a non-profit, private operating foundation,
based in Menlo Park, California, dedicated to producing and communicating
the best possible information, research and analysis on health issues.
The Kaiser Commission
on Medicaid and the Uninsured provides information and analysis on health
care coverage and access for the low-income population, with a special
focus on Medicaid’s role and coverage of the uninsured. Begun in 1991
and based in the Kaiser Family Foundation’s Washington, D.C. office,
the Commission is the largest operating program of the Foundation. The
Commission’s work is conducted by Foundation staff under the guidance
of a bipartisan group of national leaders and experts in health care and
public policy.
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