Medicaid Mess

By Greg Scandlen

The states are trying to figure out what to do with the Medicaid responsibilities of ObamaCare, especially since Judge Vinson in the Florida decision squelched any hope they might have had that it would be tossed out in court.

The issue goes well beyond the expansion to 133% of poverty for all adults. Most of that (90%) will be paid for by the Feds, although that still leaves a lot of benefits and administrative expenses for the states to pick up. The bigger issue is with the people who are currently eligible but not enrolled. Some 11 million of the uninsured are currently eligible for Medicaid or SCHIP. The new law divides the state/federal match for these people at the same place it has been for some time.


States Slashing Medicaid

Also of concern is the “maintenance of effort” requirement in the new law. Arizona, for one, expanded Medicaid eligibility to single adults some years ago, to the point of being one of the most generous states in the country. Now, with state finances in the toilet, they would like to cut back on the eligibility levels, but will probably not be allowed to.  Kaiser Health News reports that Arizona’s “Medicaid spending has gone from 17 percent of its general fund in 2007 to nearly 30 percent this year.”

It isn’t just Arizona. The New York Times reports that California’s Jerry Brown wants to cut Medicaid by $1.7 billion, and New York’s Andrew Cuomo wants at least $2 billion in cuts. The Times notes that part of the stimulus package in 2009 included $90 billion to offset rising Medicaid costs, and Congress appropriated another $15 billion last August, but even with that help, “deficits were so deep that 39 states cut Medicaid payments to providers in 2010, and 20 states pared benefits.” Now that money is running out –

On July 1, the enhanced federal aid will disappear, causing an overnight increase of between one-fourth and one-third in each state’s share of Medicaid’s costs. But because of the federal eligibility restrictions, the options for states are largely limited to cutting benefits that are not federally required; reducing payments to doctors, hospitals and nursing homes; and raising taxes on those providers.


States Think About Withdrawing from Medicaid

The Wall Street Journal reports that, “At least a half-dozen states have publicly discussed withdrawing from the Medicaid program altogether because of its expense.” For example –

Texas estimates that it will cost an additional $9.1 billion to retain its current Medicaid service levels through 2013. If it tried to plug that gap by cutting health-care provider rates, it would have to reduce them by 48%— and that might drive care providers to stop accepting Medicaid patients, according to the governors’ letter. Texas Gov. Rick Perry, a Republican, has threatened to pull out of Medicaid.


Medicaid Panel Crashes

Meanwhile, a new federal commission tasked with recommending better information systems for state Medicaid programs has hit a brick wall, according to an article by Brett Coughlin in Politico.

The story says,

… the Medicaid and Chip Payment and Access Commission (MACPAC) hit the reset button Friday when faced with the complexity and cost of the effort.”

One panel member called for a “do over” and others suggested the panel was poised to hit Congress “in the face” with a big new request for funds. A new survey to Medicaid and Children’s Health Insurance Program beneficiaries, for instance, is estimated to cost $45 million.

So, maybe not so much.


2 Responses

  1. TennCare will see an increase in spending between $1.5 billion, and $3 billion per year as TennCare enrollment will increase by 61%

  2. Greg,
    The insidious part of this is that now that our parents and increasingly us are at the age where we need help with long term care, we of the middle class have no other choice especially if the care needed is beyond our capability.
    IF we had more money in our hands all along all of our working lives and we HAD to plan for this possibility most of us would have done so.
    We also would be able to pay cash for care and demand lower prices and better care for our cash.
    I expect that there will be plans made to begin to accommodate this new attitude for those younger than 50 or lower.
    The front loading of this years ago is now coming to haunt us all.

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