Reduced Federal Medicaid Payments in 2012: Many States Already Cutting Back
By David Heymsfeld, AAPD Policy Advisor
In recent weeks supporters of Medicaid have focused on advocating against proposals, such as block grants and global spending caps, which could lead to drastic reductions in future federal funding of Medicaid. The threats of these proposals have obscured the fact that even if none of these proposals are enacted there are provisions in existing law which will result in less spending for Medicaid in 2012 than in 2011. In many states this is likely to lead to reduced Medicaid services including for people with disabilities and their family members.
Background: In the Medicaid program, each state establishes its own program although it must work within federal requirements. The federal government helps fund each state’s program, with the federal share averaging about 57%. Medicaid is the largest expense in state budgets, and constituted about 22% of total state spending in 2010.
Federal Cutbacks Taking Effect on July 1, 2011: As you may recall, there was legislation passed in 2009 to combat the recession, that is, the American Recovery and Reinvestment Act, also referred to as “the stimulus.” This temporarily increased the federal share for Medicaid by about 10%, resulting in the states receiving about $87 billion in increased funding. This increased rate of funding ends on July 1, 2011. However, at the same time, the needs are growing. For instance, as a result of the recession, Medicaid enrollment increased by 8% in 2010, with estimated growths of 5% in 2011 and 4% in 2012.
State Response to Lower Federal Funding: The states’ responses to reduced federal funding are described in some detail in a Spring 2011 Report of the National Association of State Budget Officers in a document called “Fiscal Survey of the States,” link at http://www.nasbo.org/LinkClick.aspx?fileticket=yNV8Jv3X7Is%3d&tabid=38
With federal funding to be reduced by 13% in Fiscal 2012, most states are planning some increases in their own funding, but not enough to close the gap. Overall Medicaid funding is expected to decrease 3%. With the lower funding, most states are planning some changes to limit costs of their programs.
How States Cut their Medicaid Programs: These changes include reduced provider payments in 33 states, making it more difficult for Medicaid patients to find providers willing to treat them. Other measures include limitations on benefits to be carried out in 25 states. Another 13 states will put limitations on prescription drugs. New or higher co-payments will occur in 21 states and there will be expansions of managed care in 19 states. In fact, many states are proposing more than one of these changes. For instance, Table 29 (page 57) lists which states have cut or plan to restrict community-based care (CA, MN, NY, WA).
Note that the so-called Maintenance of Effort (MOE) provisions included in the health care reform Act prevent the states from making other changes such as increasing income eligibility levels or otherwise making it more difficult for individuals to apply.
Suggestions for Further Advocacy:
- Read Chapter Four, “Medicaid Outlook,” in “Fiscal Survey of the States: An Update of State Budget Conditions” at http://www.nasbo.org/LinkClick.aspx?fileticket=yNV8Jv3X7Is%3d&tabid=38.
This will give you some sense of what your state is looking at in regard to Medicaid. For instance, Table 28 shows some specific strategies states are using. Note also that the states are considering ways to increase revenues (Table 30).
- Contact your governor’s office or state legislator to learn about specific proposals to cut back Medicaid in your state.
- Protest early and often any cuts that are unfair to people with disabilities or revenue enhancements that unfairly burden people with disabilities and their families.
- Comment in the box below or send concerns to [email protected]