Budget Cuts Put Medicaid, CHIP at Risk

With Medicaid due to cover millions of uninsured Americans in just three years,  state funding cuts may undermine how much care the government-run healthcare insurance program for the poor will offer new enrollees.  As many as 24 states plan to slash a minimum of $4.7 billion from their Medicaid plans thanks to four years of budget shortfalls, according to data provided by the nonpartisan Center on Budget and Policy Priorities and Families USA, a consumer-advocacy group.  The cuts might include reductions of as much as 15 percent in reimbursement rates for physicians, hospitals and other care providers, higher co-pays for beneficiaries, including children, and the loss of optional benefits, including preventive care as well as dental and vision services.  Some states plan to restrict eligibility under enhanced Medicaid plans that offer services beyond the basics. 

“The provider rate cuts are going to mean that fewer providers will offer Medicaid services by the time we get to 2014, and that’s bad. It pulls in the opposite direction of where healthcare reform’s trying to go,” said Mike Leachman of the Center on Budget and Policy Priorities. 

As Congress works to cut the federal deficit to meet a November deadline, additional cuts to the $427 billion Medicaid program also are likely.  Medicaid is funded jointly by federal and state governments but administered by the states with federal oversight.  The growing pressures mean access to healthcare services under Medicaid may be restricted, despite its role in expanding health coverage to 32 million more people under President Barack Obama’s Patient Protection and Affordable Care Act (ACA).  Medicaid and the Children’s Health Insurance Program (CHIP) are expected to add 17 million uninsured Americans starting in 2014, when the ACA requires that a majority of people carry health insurance.  

“We do see a lot of rate cuts,” according to a senior administration official.  “Some of them are going to be more temporary, some of them are going to be more permanent.  Some of them are going to hold and some of them may not hold based on access concerns.  We ought to proceed in a thoughtful way, both we at the federal level and states at the state level,” the official said. 

Already, 10 states have passed laws that cut reimbursement rates for either inpatient or outpatient children’s services provided by Medicaid.  Another nine states have passed laws that will cut children’s access to healthcare or erect new barriers to obtaining coverage.  Illinois, for one, has a two-year moratorium on expanding Medicaid and limited eligibility for CHIP to 300 percent of the federal poverty level.  Indiana slashed its standard for CHIP to 250 percent of the poverty line.  Other state laws want agencies to seek waivers from federal eligibility requirements.

Making a bad situation even worse, Standard & Poor’s recent downgrade of American debt adds to the uncertainty about the future of Medicaid and CHIP.  A bipartisan super committee, composed of 12 Congressmen and Senators –six from each party — must recommend as much as $1.5 trillion in federal budget cuts over the next 10 years.  That is likely to put Medicaid and CHIP, which were supposed to be off the table, into play.  “They’re talking about trillions — with a ‘t’ — in cuts,” said Matt Salo, executive director of the National Association of Medicaid Directors.  “And when you’re talking about trillions in cuts, almost everything has to be on the table.” 

The American Academy of Pediatrics is concerned that some of the aspects of the debt-ceiling proposal will make it into the final cuts for this reason: “Children make up half of all Medicaid enrollees.  It is a lifeline for kids in low-income families and children with special healthcare needs, such as those with congenital heart diseases, spina bifida or cerebral palsy,” said O. Marion Burton, MD, the academy’s president. 

The upside is the fact that Medicaid, as well as Medicare and Social Security, remain popular with the public, according to a recent Pew Research Center survey.

Not surprisingly, there is also a downside.   The number of adult Americans who have health insurance declined in 2010, according to the National Center for Health Statistics, a division of the Centers for Disease Control and Prevention.  Americans of all ages who were uninsured at any point during the last year totaled 60.3 million in 2010, an increase of almost two million when compared 2009.  Private healthcare coverage declined, while public coverage rose, especially for children.  Of non-elderly adults, 61.1 percent had private coverage in 2010, a decline of 1.7 percent.  The percentage of privately covered children fell by 1.9 percent to 53.8 percent.  Fewer children in general lost coverage, because the percentage of children in Medicaid and the Children’s Health Insurance Program rose to 39.8 percent.  The uninsured rate for those earning 100 to 200 percent of the federal poverty level rose to 43 percent in 2010.

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