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(Image from the Kaiser Commission on Medicaid and the Uninsured presentation)

June 18, 2010 – UPDATE: According to American Medical News, the federal government pays for 57 percent of Medicaid costs on average, varying by state. The 2009 economic stimulus package increased this average by at least six percentage points through December 31, 2010, which helped prevent significant program cuts, including reductions in physician pay.

The National Conference of State Legislatures says at least 33 states as of late April 2010 proposed or adopted budgets that included the expected (not yet passed by Congress) additional federal dollars. The Senate version of the American Jobs and Closing Tax Loopholes Act would continue enhanced Medicaid stimulus funding through June 30, 2011.

California Governor Arnold Schwarzenegger is attempting to address the state’s $18 billion fiscal 2010-11 deficit by proposing to end the state’s welfare program and require co-pays for Medicaid enrollees.

(Image from American Medical News based on Kaiser Family Foundation report)


Original post — May 20, 2010

All states, with the exception of Vermont, are legally required to balance their budgets annually or biennially.  To accomplish this, states attempt a variety of approaches to cut spending and increase savings — and Medicaid is often one of the first state programs on the chopping block. Governor Rick Perry (R) recently released a plan to save $1.2 billion in the current Texas FY 2010-2011 budget.  With the state Medicaid program reduced by $64 million, provider reimbursement rates were not spared.  Although a two percent cut was a possiblity, some are concerned the one percent reduction taking effect September 1 will discourage providers from accepting new patients enrolled in the program.

In Missouri, the 2011 state budget approved by lawmakers assumes: (1) Medicaid costs will grow by less than originally projected; (2) savings as a result of several bills that have yet to pass the Legislature; and (3) additional savings by shuffling money among earmarked accounts.  Also in an effort to close a $350 million budget gap, lawmakers considered taxing insurance premiums for Medicaid managed care plans, but ultimately removed this provision from the final version of the bill.  Currently, only California has such a tax.

Arizona Governor Jan Brewer (R) recently signed legislation to restore $385 million to the state’s Medicaid program. The funding cut approved by the Governor in March as part of the state’s FY 2011 budget would have dropped more than 310,000 people from the program effective January 1.  The new law also reauthorizes and finances the state’s Children’s Health Insurance Program, which covers 47,000 low-income children.  The shift in state policy follows the enactment of the federal health care legislation, which requires states to continue funding health care programs at current levels or risk forfeiting all future federal funding.  Voters recently approved a ballot measure to institute a temporary one percent sales tax increase to raise state revenue.

Despite pressure from a Democratic-controlled legislature, Minnesota Governor Tim Pawlenty (R) would not approve an expansion to the state’s Medicaid program during budget negotiations.  The new health reform law enhances federal matching funds, sweetening the deal for states to enroll more participants in medical assistance programs.  Some speculation as to whether the Governor—who is not seeking reelection—is opposing “Obamacare” to boost his chances in becoming the Republican presidential candidate in 2012.

In order to maintain funding levels and increase Medicaid recipients, the Alabama Legislature tapped state funds — by transfering from other state agencies, state drug rebates, tobacco settlement funds and provider specific assessments — and utilizing available federal matching funds.  The state also is pursuing means to save money within Medicaid by using new technology to aggressively address fraud and abuse.


Additional resources on Medicaid

Kaiser report on Medicaid funding under Health Care Reform

Other KFF Medicaid / CHIP resources



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