States grapple with severe Medicaid cuts

Despite the potential for states to receive increased federal support for their Medicaid programs in 2014, in the short term, at least two states--Michigan and Tennessee--expect things to get worse before they get better.

In Michigan, where one in six residents, is now covered by Medicaid, low reimbursement rates are forcing physicians and hospitals to reduce services to these patients and even close parts of their hospitals, reports The Michigan Messenger. Although healthcare providers are lobbying against an extension of last year's 8 percent cut in reimbursement for services for Medicaid clients, the state's budget crisis in the hands of a Republican-controlled Senate makes deeper cuts likely.

Last month, legislators passed a budget for the Department of Community Health that cuts about $10 million from the program by eliminating "optional" services such as prescription drug coverage, hospice care, home health care, physical therapy, coverage for 19 and 20 year olds, and by adding a 4 percent cut in Medicaid reimbursement rates for some physician services.

Under the joint state/federal program, the federal government matches each dollar spent by the state Michigan with about three dollars. "This puts the state in a catch 22," said Gary McDowell, chair of the House Appropriations Committee on Community Health. "The Medicaid caseload has almost doubled, and we have to put up the first dollar for services."

While access is the chief concern for covered patients in Michigan, nearly 100,000 elderly and disabled in Tennessee have found themselves dropped from the rolls entirely as a result of a "re-verification" process by the state.

After identifying people from the program who have moved out of state, are no longer disabled or whose incomes exceed the limits (74 percent of the federal poverty level), the state determined that 55,000 beneficiaries can remain covered and 100,000, including an unknown number of children, were no longer eligible. The move is expected to cut the program's costs $170 million annually, just over 2 percent of its $7 billion annual budget.

"If you're a state like Tennessee that has significant numbers of people in your Medicaid program who are not mandated to be there, you're going to be looking closely at them to balance your budget, even if they are in these horrible situations," said Todd Eberly, assistant professor of political science and coordinator of public policy studies at St. Mary's College of Maryland and a former Medicaid consultant. "Unfortunately, most of Medicaid is not designed for people in medical need."

To learn more:
- read this Kaiser Health News article
- read this article in The Michigan Messenger

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