Which States Will Be Hardest Hit When Matching Fed Funds For Medicaid Expire In 2010?

December 20, 2009

Reading in the NYT where:

The survey found that 38 states used the money to avoid or reduce cuts in provider payments and that 36 avoided benefit cuts. Because the federal money was conditional on states not reducing eligibility for Medicaid, 14 states reversed previously enacted restrictions and five abandoned plans to tighten coverage.

But state officials are already panicking about how to compensate when the spike in federal matching funds expires at the end of 2010. Few anticipate any significant reduction in their Medicaid rolls by then.

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The Centrist and millions of others wonder which states will be the hardest hit when matching Medicaid funds expire by the end of 2010.

Via Time.com

December 19, 2009

The Medicaid expansion would “have the biggest impact in states with high numbers of poor uninsured people and tight Medicaid eligibility standards.” Nebraska has the 23rd highest number of uninsured residents with incomes below 133%

Via Wikipedia

The U.S. government is committed under current law to mandatory payments for programs such as Medicare, Medicaid and Social Security. The GAO projects that payouts for these programs will significantly exceed tax revenues over the next 75 years. The Medicare Part A (hospital insurance) payouts already exceed program tax revenues and Social Security payroll taxes fully cover payouts only until 2017. These deficits require funding from other tax sources or borrowing.^[ The present value of these deficits or unfunded obligations is an estimated $41 trillion. This is the amount that would have to be set aside during 2008 such that the principal and interest would pay for the unfunded commitments through 2082. Approximately $7 trillion relates to Social Security, while $34 trillion relates to Medicare and Medicaid. In other words, health care programs are nearly five times as serious a funding challenge as Social Security. Adding this to the national debt during September 2008 of nearly $10 trillion and other federal commitments brings the total obligations to nearly $53 trillion.^[

The Congressional Budget Office (CBO) has indicated that: "Future growth in spending per beneficiary for Medicare and Medicaid—the federal government’s major health care programs—will be the most important determinant of long-term trends in federal spending. Changing those programs in ways that reduce the growth of costs—which will be difficult, in part because of the complexity of health policy choices—is ultimately the nation’s central long-term challenge in setting federal fiscal policy.

Via NYT

September 30, 2009

The recession is driving up enrollment in Medicaid at higher than expected rates, threatening gargantuan state budget gaps even as Congress and the White House seek to expand the government health insurance program for the poor and disabled, according to a survey released Wednesday.

The annual survey of state Medicaid directors, conducted for the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured, found that the program had been spared the worst effects of massive state budget shortfalls because of federal aid in the stimulus package. But it also revealed grave concerns about what will happen when that relief dries up at the close of 2010.

As unemployment surged, enrollment in state Medicaid programs grew by an average of 5.4 percent in the previous fiscal year, the highest rate in six years, according to the Kaiser survey. In eight states, the growth exceeded 10 percent.

Last year’s average growth was well above the 3.6 percent that had been forecast by the Medicaid directors a year earlier. In this year’s survey, the directors projected that enrollment would continue to accelerate in the current 2010 fiscal year, growing by 6.6 percent.

The states and the federal government share the $333 billion annual cost of Medicaid, which insured 62 million low-income and disabled people at some point in 2007. It is the states, however, that regulate that spending by setting eligibility cutoffs, benefit levels and provider payments, within federal guidelines.

The Kaiser survey found that the growth in Medicaid spending in 2009, at 7.9 percent, was the highest in five years. That number also may increase this fiscal year. Three-fourths of the agency directors said they already fear their appropriations will not be enough and that lawmakers will have to find more money or, more likely, cut benefits or provider payments.

One such state is Nevada. “We’re seeing the trajectories of our enrollment growth as well as our revenues all going in the wrong direction,” said Charles Duarte, administrator of the state’s Division of Health Care Financing and Policy.

Medicaid is, by definition, a countercyclical program. Demand for it is always highest at the time that states can least afford it because of slumping tax revenues.

The highest spikes in Medicaid enrollment often trail the worst recessionary indicators. It was not until a year after the 2001 recession that the growth in Medicaid enrollments peaked at 9.3 percent.

Vernon K. Smith, who directed the survey for Health Management Associates of Lansing, Mich., said he doubted that enrollment growth would reach that level as a result of this recession, but that it was not out of the question. “Significantly many states said the pace of growth accelerated as the year went on,” he said.

Some states did cut certain Medicaid benefits last year, and two-thirds of them either froze or reduced payments to providers. Those payments are typically the lowest made by any insurer — often falling below actual costs — and as a result some physicians decline to accept patients with Medicaid.

Nonetheless, state budgets were buffered from even worse pain by the federal stimulus package enacted in February. The largest single component of state aid in the package, worth about $87 billion, provided a temporary increase in federal Medicaid reimbursement to the states.

The survey found that 38 states used the money to avoid or reduce cuts in provider payments and that 36 avoided benefit cuts. Because the federal money was conditional on states not reducing eligibility for Medicaid, 14 states reversed previously enacted restrictions and five abandoned plans to tighten coverage.

But state officials are already panicking about how to compensate when the spike in federal matching funds expires at the end of 2010. Few anticipate any significant reduction in their Medicaid rolls by then.

Governors also have expressed concern about the fiscal impact of the health care legislation being negotiated in Washington, which would vastly expand eligibility for Medicaid as one means of covering the country’s 46 million uninsured.

The program is largely limited at present to low-income children, pregnant women and parents of qualifying children. But under bills in both houses, eligibility would be granted to anyone with an income of up to 133 percent of the federal poverty level (currently $29,326 for a family of four). That could add an estimated 11 million people to the rolls.

Initially, the federal government would absorb most of the cost. But the bills vary on that score and some states may bear higher costs than others. Three-fourths of the Medicaid directors said they thought the changes might deepen their budget holes.

“Many officials felt that their states would be unable to finance the cost of a Medicaid eligibility expansion unless the federal government assumed 100 percent of the costs, especially during the early years,” the report said.