Stateline Story

What Medicaid Cuts Look Like

The recession is forcing more Americans to turn to Medicaid, the vast state-federal health insurance program for the poor. But as states struggle to meet the rising demand, doctors and other health care providers are being paid less and patients' choices are being restricted — if they are covered at all anymore.

Arizona is finalizing a budget deal that would eliminate Medicaid coverage for more than 310,000 adults, a dramatic step by any measure, and one most states see as a last resort. The move is part of a budget deal that seeks to eliminate a $2.6 billion state budget gap, and it would reverse a 2000 decision by voters to expand Medicaid coverage.

But even in states where the Medicaid rolls aren't being trimmed yet, the imbalance between residents' demand and states' ability to meet that demand is resulting in noticeable changes.

North Carolina just announced that it will follow 40 other states and limit Medicaid patients' prescription drug choices to generics or brand names that come with a rebate for the state, the Raleigh News and Observer reported . The change is expected to save the state up to $30 million a year.

Many states are eliminating "optional" benefits such as dental or vision coverage.

In Ohio, the owners of small pharmacies are struggling because the state reduced its reimbursements for Medicaid drug prescriptions by 50 percent, the Columbus Dispatch reported . The state used to pay pharmacies $3.70 for every prescription they filled — an amount that had been set for about a dozen years. In an effort to save $10 million a year, the state now pays pharmacies $1.80.

That's among the lowest reimbursement rates for pharmacies of any state Medicaid program, the Dispatch noted. California, by contrast, pays $7.25 per prescription.

Doctors also are feeling the burden, shedding Medicaid patients because it doesn't make financial sense to accept them anymore. The New York Times today highlights the case of a doctor in Flint, Mich., who told the paper he often received Medicaid reimbursements of no more than $25 a visit, and "that he was losing money every time a patient walked in his exam room." And that was before the state of Michigan reduced those reimbursements by 8 percent in an effort to save money.

Every state has seen an increase in its Medicaid rolls this recession, according to a report by the Kaiser Commission on Medicaid and the Uninsured . The period between June 2008 and June 2009 saw the biggest-ever yearly increase in the program's enrollment.