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States look to tame the Medicaid monster

CHICAGO — In Illinois, a pharmacist closes his business because of late Medicaid payments. In Arizona, a young father's liver transplant is canceled because Medicaid suddenly won't pay for it. In California, dentists pull teeth that could be saved because Medicaid doesn't pay for root canals.

Across the country, state lawmakers have taken harsh actions to try to rein in the budget-busting costs of the health care program that serves 58 million poor and disabled Americans. Some states have cut payments to doctors, paid bills late and trimmed benefits such as insulin pumps, obesity surgery and hospice care.

Lawmakers are bracing for more work when they reconvene in January. Some states face multibillion-dollar deficits. Federal stimulus money for Medicaid is soon to evaporate. And Medicaid enrollment has never been higher because of job losses.

In the view of some lawmakers, Medicaid has become a monster, and it's eating the budget. In Illinois, Medicaid sucks up more money than elementary, secondary and higher education combined.

Medicaid costs are shared by the federal and state governments. It's not just the poor and disabled who benefit. Wealthier people do, too, such as when middle-class families with elderly parents in nursing homes are relieved of financial pressure after Medicaid starts picking up the bills.

Contrary to stereotype, it's the elderly and disabled who cost nearly 70 cents of every Medicaid dollar, not the single mother and her children.

Last year's economic stimulus package increased the federal share of Medicaid money temporarily. But that money runs out at the end of June, when the federal government will go back to paying half the costs, rather than 60 to 70 percent. So more cuts could be ahead.

During the Great Recession, millions of people relied on the Medicaid safety net. From 2007 to 2009, the number of uninsured Americans grew by more than 5 million as workers lost jobs with employer-based insurance. Another 7 million signed up for Medicaid.

Just when caseloads hit their highest point, the nation's new health care law required states not to change the rules on who's eligible for Medicaid. That means states can't tighten Medicaid's income requirements.

So states have resorted to a variety of painful options.

In Arizona, lawmakers stopped paying for some kinds of transplants, including livers for people with hepatitis C. When the cuts took effect Oct. 1, Medicaid patient Francisco Felix, who needs a liver, suddenly had to raise $500,000 to get a transplant.

"They are taking away his opportunity to live," said his wife, Flor Felix. "It's impossible for us or any family to get that much money."

States may consider lowering payment rates to nursing homes or home health agencies or further reducing payments to doctors, said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured.

"The problem here is the program is pretty lean, and payment rates are pretty low," she said. Patients can't find care because fewer doctors accept the low payments.

Prescription drug coverage is an optional benefit, another possible place to cut, Rowland said. "But if you cut back on people's psychotropic drugs, is that penny-wise and pound-foolish? Do they end up in institutions where Medicaid pays more for their care?"

States look to tame the Medicaid monster 12/13/10 [Last modified: Monday, November 7, 2011 1:40pm]
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