[NYAPRS Enews] Stateline: States Ask Feds For Health Care Help

[Matt Canuteson]

States Ask Feds For Health Care Help

By Pauline Vu, Stateline.org November 26 2008      

      

In Utah, lawmakers have ended some physical therapy, vision and hearing
services offered under Medicaid, the national health insurance program
that serves 59 million needy. Nevada has capped enrollment in its state
children's health insurance program (SCHIP). California, looking at a
potential budget hole of more than $28 billion, is also considering
freezing enrollment in its children's program - for the first time in
the program's 10-year history. 

 

As the economy worsens, states are seeing boosts in enrollment in
Medicaid and SCHIP while they struggle with their own fiscal problems.
They're asking for relief from the federal government to prevent cutting
benefits and people from these programs. 

 

If federal help doesn't arrive soon, things could get worse for poor
people who depend on public health insurance, say state officials and
health care advocates. 

 

"Medicaid and SCHIP are on the brink of deteriorating. The question is,
are we going to step up and inject money into those programs so they can
work during the downturn, or are we going to let them deteriorate?" said
Jocelyn Guyer, the deputy executive director of Georgetown University's
Center for Children and Families. 

 

States are asking for two things in particular. 

 

First is reauthorization and expansion of SCHIP, the federal program
that gives states money to provide health insurance for children in
families that earn make too much to qualify for Medicaid. In 2007,
Congress twice passed expansions of the program with significant bonuses
for states to cover more kids, only to see both bills vetoed by
President Bush. As a result, Congress extended the program, which must
be reauthorized before it expires on March 31. 

 

States are also asking for a temporary increase in the federal share of
the joint federal-state Medicaid program, which annually costs the
states and federal government $330 billion.

 

With the election of Barack Obama, states could get both wishes. The
president-elect's proposed health care plan calls for expanding both
programs and includes a mandate that all children be covered. Obama's
reported pick of former Senate Democratic leader Tom Daschle to head the
Health and Human Services department is seen as further evidence of
Obama's determination to get a health care bill through Congress.

 

The question may be which issue the 111th Congress takes up first. State
officials are calling for an increase in federal Medicaid support to
pass as soon as possible. 

 

The National Governors Association sent a letter to congressional
leaders in October emphasizing that additional Medicaid money would
allow states to "continue services for those with the greatest need."
The governors say an infusion of $20 billion a year for two years in
federal funds for Medicaid would help states through this crisis.

 

Proponents argue that a stimulus is necessary because Medicaid is tied
to the economy. A 1 percent increase in unemployment leads to an
increase of 1.1 million uninsured and 1 million more on the Medicaid and
SCHIP rolls. The Center for Children and Families estimates that over
the last year, 4.1 million people have lost employer-based health
coverage. But at the same time, a shaky economy means states have fewer
dollars to spend on such programs. 

 

"Families are becoming uninsured because they're losing their jobs or
can't keep up with premiums ... and at the same time, you've got states
with not enough money to provide that coverage," said Rachel Klein,
deputy director of health policy at Families USA, a group that advocates
for expanding health care. "It's incredibly important that we get this
funding to the states."

 

According to a report released Nov. 25 by Families USA, 8.6 million
children, or 1 in 9, lacked health coverage in 2007. That number was
tallied before the economic meltdown. 

 

So far, signs from the incoming administration and Congress are
promising on SCHIP. Both House Speaker Nancy Pelosi and Obama's new
chief of staff, Illinois U.S. Rep. Rahm Emanuel, have said SCHIP renewal
will be one of the first issues the next Congress considers. 

 

Most states are waiting for the federal government to act before they
decide what to do with their programs. Kansas, for example, has plans to
expand children's coverage that is set to take effect next year, but
that's contingent on new federal funding. 

 

In the meantime, some states are curtailing their SCHIP programs.
Georgia is considering freezing enrollment and increasing premiums by 10
percent next year; Nevada already did both this year. If California also
freezes SCHIP enrollment as it's considering, up to 162,000 eligible
children there may be denied coverage in the first half of next year. 

 

 

On the Medicaid side, several states have been cutting or freezing
reimbursement rates to health care providers, among them California,
Nevada, New York, South Carolina and Utah. 

 

Some states are saving money by paring the recipient rolls through added
requirements. Arizona, for example, will force Medicaid patients to
re-apply for benefits more often, while California will require people
to update children's information every six months instead of every year.
In the past, such moves have led to people dropping out of the program. 

 

Rhode Island is expected to remove about 1,000 adults from its Medicaid
program by lowering qualifying income ceilings. New York Gov. David
Paterson (D), who recently announced that the state budget is $2 billion
short, called for more freezes in reimbursement rates for hospitals and
cuts of more than $500 million from Medicaid. 

 

California is especially struggling. This year, the Legislature rejected
several plans to cut Medicaid benefits, but with the state's large
shortfall, those cuts are back on the table. That includes a plan to
reduce parents' eligibility from 103 percent of the poverty line to 72
percent; a proposal to eliminate most coverage for legal immigrants; and
another to reduce dental, vision and podiatry benefits. 

 

"States have made reductions, and we always start with the easier
reductions. And now states are going to the much more difficult
reductions that directly affect people in the program," said Stan
Rosenstein, the administrator of California's Medicaid program. "It
could very well increase the number of uninsured and destabilize the
safety net."

 

Insight into what lies ahead for states could be gleaned from the past.
The only time Congress enacted a temporary increase in federal Medicaid
aid was in March 2003 to help states during the recession after the
Sept. 11 attacks. That $10 billion - part of a $20 billion total package
in general aid for states - was 2.95 percent above states' usual federal
allotment and lasted 15 months. 

 

At the time, states were making big Medicaid cuts. Every state froze or
reduced payments to medical providers such as doctors or hospitals.
Others cut back on benefits; in 2002, Massachusetts cut dental services,
which led to 100,000 fewer adults receiving dental benefits in 2004 than
in 2001. 

 

Some states increased premiums, and several cut the number of eligible
people or considered it. 

 

But the emergency federal Medicaid aid five years ago came with the
condition that states not cut people from the rolls. A proposal in
Alabama to reduce eligibility for some seniors and people with
disabilities was dropped because it would have disqualified the state
for the extra money. Ohio's legislature ended plans to cut Medicaid
coverage, while Massachusetts restored coverage for about 36,000
unemployed adults. 

 

At least 22 states used the extra money to avoid, lessen or postpone
Medicaid cutbacks; about five states restored previous cuts or expanded
the program. 

 

The federal increase in 2003 was considered such a success that U.S.
Sen. Max Baucus (D) of Montana proposed in a recent health care reform
white paper that increases in the federal Medicaid match happen
automatically during recessions. 

 

In this recession, however, states appear to be heading toward bigger
budget shortfalls. In 2003 Congress allocated only $10 billion in
Medicaid money; in this year's failed proposals, the House proposed
$14.4 billion while the Senate proposed $19.6 billion, figures that are
already likely lower than what states now need. 

 

Also, since this downturn follows so quickly on the heels of the last
one, states have fewer options for where to save Medicaid money. 

 

"So many states made cuts in the last downturn ... it's unclear how far
they can go without jeopardizing provider participation and access,"
said Robin Rudowitz, a principal policy analyst for the nonpartisan
Kaiser Commission on Medicaid and the Uninsured.

 

http://www.stateline.org/live/details/story?contentId=358476

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