Kaiser Commission on Medicaid and the Uninsured
Medicaid Spending Growth: Results from a 2002 Survey
September 2002
Prepared by Vernon Smith, Ph.D., Eileen Ellis, Kathy Gifford, Rekha Ramesh,
and Victoria Wachino
In response to their overall fiscal situations and… Medicaid cost
pressures, 45 states took action to reduce their Medicaid spending growth in
Fiscal Year 2002. Forty-one states reported that they have plans underway to
take additional actions for FY 2003, which started July 1 in most states. As
the fiscal year progresses, it is likely that more states will act to reduce
their Medicaid spending. It is also notable that for each type of cost
containment strategy, more states reported planning to undertake action in
FY 2003 compared to FY 2002.
The most common cost containment action that states are undertaking are
policies to control the cost and use of prescription drugs, but states are
also limiting payments to providers, eliminating some benefits, and
restricting eligibility:
路 Forty states are planning to implement prescription drug cost controls in
FY 2003, an increase over 32 states in FY 2002.
路 A majority of states, 29, are either reducing or freezing some of their
provider payment rates in FY 2003. Twenty-two states reported provider rate
cuts or freezes for FY 2002.
路 Fifteen states are reducing Medicaid benefits in FY 2003. Eight of these
states reduced dental benefits; states reduced other benefits, such as home
health, podiatry, and optical services as well. Nine states reduced benefits
in FY 2002.
路 Eighteen states are reducing or restricting Medicaid eligibility. Eight
states implemented eligibility restrictions in FY 2002. Four states
(Missouri, New Jersey, Nebraska, and Massachusetts) eliminated eligibility
for thousands of people. States have also restricted eligibility by changing
rules related to transitional medical assistance or changing rules related
to their medically needy programs that will make fewer people eligible for
Medicaid.
路 Fifteen states are increasing beneficiary co-payments for services other
than prescription drugs. Four states increased co-payments for
non-prescription drug services in FY 2002.
The same pressures that increased Medicaid costs in FY 2002 will persist in
FY 2003. State officials indicated that Medicaid enrollment is likely to
continue to increase, particularly if the economy does not improve. State
Medicaid enrollment forecasts are for increases that average 6.2 percent.
Medical costs are expected to continue to increase as well, adding to the
cost pressure, with prescription drug costs likely increasing again at
double-digit rates. The factors that affect Medicaid are largely the same as
those that increase costs for private insurance, where premiums increased by
nearly 13 percent in 2002.
Despite these cost pressures, state legislatures appropriated increased
funding for Medicaid for FY 2003 that averaged less than 5 percent. This
suggests that in many states the original legislative appropriation will be
insufficient to meet actual program expenditures. Medicaid officials
indicated that further program cuts will likely be considered and additional
funds will likely be needed in FY 2003. However, with state reserve and
rainy day funds substantially depleted, it will be more difficult to find
the funds needed to finance Medicaid this fiscal year and next.
http://www.kff.org/content/2002/4064/4064.pdf
Comment: Medicaid, being a program for low-income individuals, will always
be treated as a “welfare” program. In difficult financial times its need
will be greater, but funding sources will diminish. Politicians inevitably
will favor other programs as they reduce medical services for these less
fortunate individuals without a political voice.
We are spending $5757 per capita in health care this year. That would create
a $1.55 trillion pool of health care funds, more than enough to provide
comprehensive health care services for everyone. If we placed everyone in a
single risk pool, there would be no reason to submit a major sector of our
society to the indignities and inadequacies of a separate “medical welfare”
program.
