Stateline Story

Deficit-Plagued States Dole Out Medicaid Cuts

  • May 15, 2002
  • By Mary Guiden

Medicaid isn't a four-letter word, but mention it around state lawmakers these days and you'll probably see a cringe, hear a sigh, and perhaps even cause a headache.

The 37-year old state-federal program geared to help the poor and needy is the cause of much tension, worry and debate across the country. Roughly 40 states, at last count, report budget shortfalls, and Medicaid is the program most often cited as being over-budget.

States have launched a variety of responses.

Idaho cut adult dental care, while the Oklahoma House recently backed cutting 22,000 children from Medicaid rolls. South Carolina Gov. Jim Hodges proposed a temporary 2.5 percent cut in overall state spending to counter the state's Medicaid budget shortfall. Elsewhere, Texas officials are considering a yearly $10 fee for people who sign up for Medicaid, and Massachusetts lawmakers have discussed increasing co-payments and limiting access to certain prescription drugs.

"Most of the states are looking to do cost containment or quality initiatives in prescription drugs," says Kim Johnson of the National Association of State Medicaid Directors .

At least 26 states have enacted measures to address rising drug costs in state Medicaid programs in the last 18 months, the National Conference of State Legislatures (NCSL) reports.

Some state laws, deemed heavy-handed by the pharmaceutical industry, are already being challenged in court. Florida and Michigan created preferred drug lists, meaning doctors have to get an okay from the state before prescribing some drugs.

Other statestaking a slower approachwant to study ways to better manage costs for prescription drug programs.

Whatever the cost-cutting maneuver, legislators say it hasn't been an easy year. In Idaho, where lawmakers trimmed adult dental care benefits, officials are already talking about revisiting the cutbacks.

"Some of the budgets, I just felt so badly about having to make the cuts. But I didn't have a single person call me up and say, I want you to raise my taxes,'" says Rep. Frances Field, a Republican and vice chair of the Idaho Legislature's joint budget committee.

Field says despite cuts in the public schools' budget and technical school programs, officials don't really know how much they'll save. "There's a limit to what you can spend and that's what you have to look at. The last time (this happened) we raised the sales tax. That may be the way we have to go next year, but I'd hate to have to do that," she says.

Some policy experts say federal officials should increase the amount of money they're putting into the program.

"When we hit a recession, the government should raise the (federal) matching rate for states," says Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured . Medicaid is a state-federal match program, with the federal government contributing from 50 to 83 cents for every dollar.

The National Governors Association continues to push for an increase in the federal share of dollars for Medicaid in hopes of bringing states some fiscal relief. Seven of the nation's governors recently (5/7) joined U.S. Sens. Susan Collins (R-Maine) and Ben Nelson (D-Nebraska) to support federal legislation that would increase the federal match to the tune of $3.8 billion and create a $4.6 billion health care and social services grant.

State lawmakers would certainly welcome a little extra cash.

"In the past few years we have been over-budget for Medicaid or we have dipped into funds to prevent a shortfall," says New Mexico state Sen. Dede Feldman, a Democrat who chairs a legislative task force looking at ways to curb Medicaid costs.

Feldman says officials would like to boost teacher salaries, beef up early childhood education programs and provide better school-based mental health services. But none of the issues can be addressed because of the high price of Medicaid.

"We have to make some judgment calls and prioritize values and that's very difficult when you have so many needs in a poor state like New Mexico," she says.