WASHINGTON — The Obama administration injected billions of dollars into Medicaid, the nation’s low-income health program, as the recession deepened two years ago. The money runs out at the end of this month, and benefits are being cut for millions of people, even though unemployment has increased.
From New Jersey to California, state officials are bracing for the end to more than $90 billion in federal largess specifically designated for Medicaid. To hold down costs, states are cutting Medicaid payments to doctors and hospitals, limiting benefits for Medicaid recipients, reducing the scope of covered services, requiring beneficiaries to pay larger co-payments and expanding the use of managed care.
As a result, costs can be expected to rise in other parts of the health care system. Cuts in Medicaid payments to doctors, for example, make it less likely that they will accept Medicaid patients and more likely that people will turn to hospital emergency rooms for care. Hospitals and other health care providers often try to make up for the loss of Medicaid revenue by increasing charges to other patients, including those with private insurance, experts say.
Neither the White House nor Congress has tried to extend the extra federal financing for Medicaid, even though the number of beneficiaries is higher now than when Congress approved the aid as part of an economic recovery package in February 2009.
The Congressional Budget Office estimates that federal Medicaid spending will decline in 2012 for only the second time in the 46-year history of the program. But states say they will have to have to spend more on Medicaid as they struggle to make up for the loss of federal money.
State officials say they are resigned to the loss of the extra federal matching payments, given the climate in Congress, where deficit reduction is a paramount goal.
“We all see the reality of what’s going on in Congress,” said Mark W. Rupp, director of the Washington office of Gov. Christine Gregoire of Washington State, a Democrat who is chairwoman of the National Governors Association. “It’s more about cutting than spending. Why put a lot of effort into something that did not seem likely to have a positive outcome? It would have been fairly futile.”
Although Medicaid provides health insurance to one in five Americans at some point in a year, it is more vulnerable to cuts than Medicare and Social Security, which have broader political support.
“Medicaid is very much on the chopping block,” said Senator John D. Rockefeller IV, Democrat of West Virginia and chairman of the Senate Finance Subcommittee on Health Care. “Seniors vote. But if you are poor and disabled, you might not vote, and if you are a child, you do not vote — that’s a lot of Medicaid’s population. They don’t have money to do lobbying.”
Medicaid is financed jointly by the federal government and the states, with the federal government paying a larger share in poorer states like Mississippi and West Virginia and a smaller share in higher-income states like New York and Connecticut.
The aid ending next month increased the federal share of Medicaid spending in all states, with additional help for states where unemployment rates had risen sharply. The extra aid was scheduled to expire last December, but Congress extended it for six months at the urging of the White House and state officials.
The additional money pushed the average federal share of Medicaid spending nationwide to 67 percent. It will revert to 57 percent next month. The cutback in federal Medicaid money has put pressure on states to cut the budget for other programs, including education and social services. (more…)
