Every State Has Cut Its Medicaid Program; More Cuts on Way

The fiscal outlook for state Medicaid programs is bleak, according to three reports released by the Kaiser Commission on Medicaid and the Uninsured.

The reports reveal that all 50 states and the District of Columbia enacted Medicaid cost-containment measures in 2003 to counter budget problems. Provider payments were reduced in 49 states; 44 states controlled prescription drug costs; 20 states slashed dental and vision coverage; and 21 states increased beneficiary co-payments, most often for prescription drugs.

Despite these cutbacks, states still face a total budget shortfall this year of $70 billion. State officials expect to make further cuts to their Medicaid programs in 2004, according to the reports. In upcoming budgets, 49 states plan to reduce or freeze provider reimbursements, and 21 states will increase co-payments for prescription drugs or medical services.

The growth of Medicaid spending slowed for first time in seven years. For 2003 spending rose 9.3 percent, down from 12.8 percent in 2002.

Although enrollment of the elderly and disabled in Medicaid also slowed, this group accounted for almost 60 percent of Medicaid spending growth during 2000-2002, reflecting their greater use of health care services.

The Kaiser Commission found that the primary cause of the fiscal crisis is not Medicaid spending growth but a dramatic drop in state tax revenue. Revenue collected declined $62 billion, while spending increased about $7 billion in 2002.

Robert Day, director of Kansas' Medicaid program, said, "The crisis in Medicaid is simply a mirror for what's going on in health care throughout the country. It will soon be a large crisis for the private sector."

To download the Kaiser Commission reports, go to: www.kff.org/content/2003/20030922/