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Posted Apr 11 2011 7:57pm



            According to the article, “Now entering crisis mode” by Rich Daly from, the states are facing a problem with financing their Medicaid programs.


            Just when the federal government is expecting and relying on Medicaid programs to increase access to care for millions more uninsured Americans, many state programs are holding meetings to look for ways to decrease spending.


            According to information produced by the Kaiser Commission on Medicaid and the Uninsured, “Medicaid enrollment has grown by 7.6 million, or 17.8% since the beginning of the recession in December of 2007. Much of the increase was made possible by increasing federal spending, including $87 billion in stimulus funding and another $16 billion from Congress in 2010.


            But the federal funding is going to stop in June of 2011, leading many states scrambling for solutions to decrease the costs.


            Some states, such as Arizona, have moved to cut beneficiaries. However, many states are hesitant to follow in their footsteps because cutting beneficiaries means cuts to their federal funding. Currently, many states receive an almost 50% match from the federal government for each dollar they spend on a Medicaid recipients care. Because of the possibility of federal cuts, many of the state governors have writer to HHS Secretary, Kathleen Sebelius to request the federal government waive cuts in funding to states although the states will cut funding to the Medicaid programs. Sebelius, however, has stood behind the government’s policy on reducing funding to the states that choose to cut participants, and stated that she did not have the authority to waive the reductions.


            Other states have suggested that they will reduce overall costs by increasing premiums and charge mandatory co-payments at the time of service. Although this plan may seem like a good idea, many hospital executives feel as though this will essentially be a cut for the hospitals. “This is likely to be an uncollectable debt because these patients’ incomes are so low and so it’s effectively a net reduction in medical and hospital payments.”


            In addition to the “uncollectible” co-pays and increasing premiums, other states, like Florida and California, have decided the best way to reduce Medicaid costs is by cutting payments to hospital/providers by 5-10%. In some states like California, where their state-run Medicaid programs is SLREADY almost 25% lower than the national average for payment to providers, the additional reduction in provider reimbursement would likely cause many providers to “close-up shop” which will compound the already aggravating situation of finding quality providers (especially specialists) who will accept Medicaid patients.


            Medicaid is already causing lots of budgetary problems for the states, with the enactment of the Affordable Care Act, over the next 5-10 years, childless adults will become eligible for these state run programs. The federal government will pay for these additional individuals share for the first 6 years, but after that they decrease their investment by 10% which will mean the same crisis will happen in 2020.

              In order for the states to recoup some of their losses they will have to mandate that all Medicaid participants be enrolled in a managed care program that will decrease costs and access to care (when it is not medically necessary.)


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