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January 13, 2003

Most States Cutting Back on Medicaid, Survey Finds

From: New York Times - 13 Jan 2003


WASHINGTON, Jan. 13 — Two-thirds of the states say they are cutting Medicaid benefits, increasing co-payments, restricting eligibility or removing poor people from the rolls because of soaring costs and plunging revenues.

Matt D. Salo, director of health legislation at the National Governors Association, estimated today that one million to two million low-income people would lose insurance coverage because of the cutbacks.

A new survey of all 50 states, issued today, finds that 16 are cutting Medicaid benefits, 15 are restricting or reducing eligibility and 4 are increasing the co-payments charged to beneficiaries. In addition, the survey found that 21 states were freezing or reducing Medicaid payments to doctors, hospitals, nursing homes or other providers of care.

"State Medicaid directors describe the situation as bleak, grim and difficult," said Vernon K. Smith, a former Medicaid director in Michigan, who conducted the survey for the Kaiser Family Foundation. "They expect further cuts in Medicaid benefits, eligibility and provider rates, even though they are aware of the adverse effects."

Medicaid provides health care for more than 40 million people, at an annual cost of more than $250 billion. The federal government and the states share the cost, which rose 13 percent in the last fiscal year, the biggest increase since 1992.

Washington State and Oregon took pride in expanding Medicaid and other health programs a decade ago, but now are wrestling with the unpleasant choice of whether to cut benefits or end eligibility for some recipients.

Many states are cutting services for adults, including coverage of dental care, eyeglasses, hearing aids and physical therapy. But some of them have found that is not enough. So they are debating whether parents or childless adults should be taken off the rolls first.

"You reduce the benefit package before you cut people off the program," said Douglas Porter, the Medicaid director in Washington State. "Before we kick anybody off insurance, we try to make what we're offering more affordable."

After thoroughly weighing the options, Mr. Porter said, Washington has eliminated hearing, vision and dental benefits for adults on Medicaid; ended special payments to hospitals for charity care provided to uninsured people; and cut off 60,000 of the 120,000 low-income childless adults enrolled in a state program known as the Basic Health Plan.

In California, Gov. Gray Davis, a Democrat, has proposed cutbacks that would remove nearly 500,000 low-income parents from Medicaid, and state officials say even more savings will be needed.

New Jersey is curtailing coverage for low-income parents, by sharply reducing the maximum income for new applicants. In Connecticut, Gov. John G. Rowland, a Republican, recently proposed eliminating coverage for thousands of parents in households with incomes from 100 percent to 150 percent of the poverty level ($15,020 to $22,530 for a family of three).

"The situation is worsening daily," said Gary A. Perkins, president of Children's Hospital in Omaha. About 16,000 children are being removed from Medicaid rolls because of cutbacks in Nebraska, he said.

Kathie K. Osterman, a spokeswoman for the Nebraska Health and Human Services System, confirmed that 16,000 children and 12,000 adults were losing Medicaid coverage because of a state law passed last year. The law establishes a new method of counting income, so that fewer people qualify for Medicaid.

In addition, Ms. Osterman said, the state reduced Medicaid coverage for people who leave welfare and obtain jobs. Such coverage, previously available for two years, is now provided for just one year.

Like many states, Nebraska is also reducing Medicaid payments to hospitals and pharmacies and freezing reimbursement rates for doctors.

When states last faced major fiscal problems, in the early 1990's, some trimmed Medicaid. But John F. Holahan of the Urban Institute said Medicaid was more vulnerable now because state officials were less willing to raise taxes or to cut spending on education.

Seventy-five senators voted last year for a bipartisan proposal that would provide fiscal relief to the states by temporarily increasing the federal contribution to Medicaid. The sponsors of that proposal re-introduced it last week, saying the need was even greater now.

"Medicaid is the fastest growing component of state budgets," said Senator Susan Collins, Republican of Maine, a sponsor of the proposal. "While state revenues were stagnant or declined in many states last year, Medicaid costs increased."

The Bush administration has opposed any increase in the federal share of Medicaid, saying that the federal government has fiscal problems of its own.

Copyright 2003 The New York Times Company