The New Health Dialogue

Three reports released today by the Kaiser Commission on Medicaid and the Uninsured paint a picture of the States universally struggling to maintain the solvency of their Medicaid programs, while working to solve the problem through a diverse array of responses. According to one of the reports, Kaiser's 10th annual survey of state Medicaid officials in all 50 states, federal support for the Medicaid program during the recession played a huge role in keeping the health safety net intact.

The root of the problem nationally was higher than expected growth in Medicaid spending for fiscal year 2010. While predicting an average increase of 6.3 percent, the recession drove millions out of work and onto the Medicaid rolls, driving costs up an average of 8.8 percent.

Source: Kaiser Commission on Medicaid and the Uninsured using CMS and KCMU data

According to study author Vernon Smith, “The enhanced FMAP [Medicaid funding which came as a part of the American Recovery and Reinvestment Act (ARRA)] “literally saved the health safety net.”

Differing expectations of the extension of ARRA funding past its initial expiration of December 2010 have put states in different levels of preparedness to close 2011 budget gaps; those that assumed it would actually expire are finding their coffers a little more full than they expected, and those that assumed a 100 percent renewal rather than the phased-down funding are finding that it’s best not to count your chickens before they hatch.

The precarious fiscal state of Medicaid programs nationwide has led to a variety of cost-control measures that the study "Hoping for Economic Recovery, Preparing for Health Reform" breaks down into three main categories:

• 20 states restricted benefits -- largely adult dental benefits, chiropractic therapy, and imaging services;
• 18 states put controls on long-term-care;
• 39 states cut or froze provider reimbursements.

Yet, even while states scramble to fill budget holes, they’re also beginning to make use of the many tools given them by health reform. According to Smith, “the challenge for the states is all the easy policies have been enacted,” and now Medicaid directors are, by choice or necessity, beginning to flex their economic and clinical power to impact the practice of medicine as a whole. 

Take for example provider reimbursement cuts. Many states pointedly protected or even increased payments to primary care physicians. Others are moving to enact medical-home programs for their Medicaid beneficiaries. States such as North Carolina have been help up as models for their use of Medicaid to drive quality improvements and reimbursement reforms for their communities as a whole. As health reform implementation moves forwards, their clout stands to grow even more as approximately 16 Americans join under expanded eligibility requirements and millions of dollars for demonstration programs become available.