States' Deepening Fiscal Crisis Threatens Medicaid Recipients

Every state except Alabama in fiscal year 2003 plans to or already has cut its Medicaid program, according to a new survey by the Kaiser Commission on Medicaid and the Uninsured. Seventeen states are taking action to reduce spending on long-term care services.

The survey, carried out in December 2002, midway through the states' fiscal year, updates a similar survey of state budgets carried out in June 2002. The new survey reveals that 32 states found it necessary to take further action to reduce Medicaid spending, and another five states that had not taken action prior to July now feel it is necessary to make cuts. The cuts are coming in the form of reduced benefits, restricted eligibility, increased copayments, dropped beneficiaries or reduced payments to providers. The actions are being taken in the face of a worsening fiscal situation and widening budget gaps for states.

In many cases, long-term care services will not be spared. Seventeen states have planned to or are taking action to reduce spending on long-term care services, both in nursing homes and community-based settings.

More than half the states reported that their Medicaid budget shortfall is even greater than they had projected.

The study concludes that "Unless Medicaid spending growth suddenly and unexpectedly abates, or unless state revenue collections rebound, Medicaid is destined to be in a precarious position."

To download the report, 'Medicaid Spending Growth: A 50 State Update for FY 2003,' go to: