Press Release: States Continue to Revisit Medicaid

NCSL News graphic

December 11, 2003

States Continue to Revisit Medicaid

New NCSL report shows trends during the past few years of fiscal crisis

WASHINGTON, DC - All 50 states have altered their Medicaid programs during the past two years of budget turmoil, according to a report released Wednesday by the National Conference of State Legislatures' Health Policy Tracking Service.

State Medicaid Actions: A two-year review of state actions as a result of the states' fiscal crisis shows that states reduced or eliminated optional benefits, altered provider reimbursement rates, increased patient co-pays, implemented prescription drug cost saving measures and, as a last resort, trimmed eligibility as they have closed a cumulative $200 billion budget gap. Based on a survey of states' Medicaid budgets, the report shows how states have managed this program's expenses as rising unemployment in the faltering economy meant more and more people were eligible for state-sponsored healthcare.

"At the close of 2003, state Medicaid programs are quite different from the programs that were available to enrollees two years ago," the report states.

In the past two years:

Forty-one states froze or reduced reimbursement rates for at least one healthcare provider or facility, while 34 states increased reimbursement rates. Twenty-nine states did both, as they sought the proper balance of reimbursement rates among facilities and providers.
Forty-five states enacted legislation to control the cost of prescription drugs. The most popular measures taken were establishing or expanding: prior authorization for prescription drugs or establishing or expanding preferred drug lists. Prescription drug benefits are considered optional, but all 50 states offer them. They are the fastest growing Medicaid cost.
Thirty-three states reduced or eliminated non-pharmaceutical optional benefits. Seventeen states reduced dental benefits. Twelve reduced vision benefits. Eleven states reduced chiropractic services and eight reduced transportation services.
Thirty-one states established or increased cost sharing requirements for Medicaid recipients. In 2003, 21 states implemented or increased prescription drug co-payments.
Twenty-two states froze or limited eligibility. In some cases, these changes were subtle, involving the application process, for example. In other cases, the modifications were more overt. States were forced to reduce eligibility for immigrants, of children in the State Children's Health Insurance Program and the medically indigent, for example.

"Reducing eligibility levels is usually a last resort," said Lee Dixon, director of the HPTS. "But as the budget crisis continued into 2003, everything was on the table. Fortunately, the Medicaid cuts in 2003 were not as severe as many policymakers expected, though, thanks, in part to the $20 billion in federal assistance states received."

Despite the fiscal crunch states have found themselves in during recent years, they have done their best to expand access by taking advantage of federal matching programs including the Ticket to Work and Work Incentives Act of 1999.

Reporters can obtain free copies of FY 2004 NCSL Medicaid Budget Survey, by sending an e-mail to info@hpts.org.

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 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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