FEATURED NEWS: Facing Deficits, States Scale Back on Medicaid Programs

Demands from governors and state lawmakers for a federal financial bailout are growing as states from California to Florida make sweeping cuts in popular programs like Medicaid in an effort to balance their budgets, according to an article in the Los Angeles Times.

"This is the worst budget crisis states have faced since World War II," said Raymond Scheppach, executive director of the National Governors Association.

By far the biggest concern for the states is funding for Medicaid, the medical program for the poor that is jointly paid for by the federal and state governments and that covers the lion's share of nursing home costs for the elderly. States are now spending more money on Medicaid than any other program except elementary and secondary education, according to the National Governors Association's new study, Fiscal Survey of States.

States are seeking more help with Medicaid from the federal government, but the federal government is now contending with its own deficit woes and is unlikely to offer nearly as much help as the states are requesting. As costs explode, states are beginning to scale back Medicaid coverage. (See ElderLawAnswers news article, Cash-Strapped States Slashing Medicaid Benefits, Eligibility, Sept. 13, 2002.)

Larger and more widespread cuts seem likely in the months ahead, most experts believe. "Any state with a fiscal problem is going to be cutting their Medicaid program next year," said Al Jackson, vice president for political affairs at the American Hospital Association.

Trying to forestall further cuts, the Senate in July approved an emergency $6 billion increase in the federal contribution to the program. But the bill died in the House amid opposition from the Bush administration.

To download the National Governors Association's Fiscal Survey of States in PDF format, go to: http://www.nga.org/cda/files/NOV2002FISCALSURVEY.pdf