NCSL Press Release

NCSL News graphic

July 24, 2003

Fiscal Problems Cause States to Reconsider Medicaid Services

New Report by NCSL’s Health Policy Tracking Service Shows Changes to Drug Programs, Optional Benefits, Reimbursement

SAN FRANCISCO – At a time when the faltering economy is adding to the ranks of the needy, in some states you’ll have to be poorer in 2004 to qualify for Medicaid than you did two years ago.

Cash-strapped states are struggling to cover as many people and services with this program as they did in the 1990s. A new report by the National Conference of State Legislatures’ Health Policy Tracking Service shows that most states are managing to avoid turning people away entirely, though. State legislatures have turned first to reducing pharmaceutical costs, optional benefits and provider reimbursement to balance program budgets.

Although as many as 20 states were forced to consider significantly reducing their Medicaid rolls to save money, most avoided this by cutting other program areas and utilizing the $10 billion in federal aid Congress recently earmarked for Medicaid – a program that eats up 20 percent of the states’ cumulative budget.

“These tight budget times have unfortunately called for sacrifices from everyone,” said NCSL President and Oklahoma state Sen. Angela Monson. “By and large, this safety net is still pulled taut under vulnerable Americans, but as healthcare costs rise, states are going to have to figure our how to do more with less money.”

HPTS gathered the information for this report through a survey of legislative and executive actions that will affect Medicaid in fiscal year 2004. The results of the survey show that:

Thirty-seven states changed prescription drug laws. Some put in place or expanded preferred drug lists, prior-authorization rules or co-payments. Nine of these states, though, expanded or established medication assistance programs.
Twenty-three states reduced or eliminated optional benefits such as dental, vision, chiropractic or mental health services.
Twenty-two states established or increased patient co-payments, 18 for prescription drugs and 19 for other programs.
Thirty-eight states changed provider and service reimbursement rates, with 31 of these reducing or freezing rates. Reimbursement decreased for pharmacists, hospitals, nursing facilities, prescriptions, doctors, dentists and other providers in various states.

These cuts, and those that occurred in fiscal year 2003 buck a trend. Medicaid enrollment grew dramatically in the 1990s as Congress required states to cover more low-income pregnant women and children. The early ‘90s recession also contributed to the program’s growth. Between 1991 and 2001, 12.8 million new people signed up – for an increase of 51 percent.

“Medicaid spending in the states is second only to education today,” said Lee Dixon, director of the HPTS. “You can’t have a fiscal crisis of this magnitude and expect such an expense to be immune from cuts.”

Despite these pressures, some states are managing to broaden some benefits, in many cases shifting people from formerly state-run programs to Medicaid, which the federal government helps pay for. In addition to the nine states that expanded or began prescription-assistance programs, seven states – Louisiana, Michigan, Maryland, New York, North Dakota, Virginia and West Virginia – took advantage of the federal Ticket to Work and Work Incentives Act of 1999 to offer continual coverage to disabled citizens who want to stay in the workforce.

Reporters can obtain free copies of FY 2004 NCSL Medicaid Budget Survey, by sending an e-mail to press-room@ncsl.org or calling the public affairs staff at (405) 905-1020.

HPTS is the preeminent communications and information organization that identifies, researches, monitors and reports on state health legislation, policies and programs that affect the private and public sectors. The service is an arm of NCSL, which is a bipartisan bipartisan organization serving the legislators and legislative staff of the states, commonwealths and territories. Its mission is to improve the quality and effectiveness of state legislatures, foster interstate communication and provide the states a strong, cohesive voice in the federal system.

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