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Monday, March 7th 2011

The Future of Medicaid

Medicaid is a matched grant program, wherein the federal government matches money spent by the states, to provide a funding source for healthcare the economically disadvantaged. Medicaid, as can be imagined, has been pushed by the Great Recession.

From 2007 to 2009, Medicaid enrollment accelerated as a result of the recession. During economic downturns, people lose jobs and incomes decline making more individuals eligible for Medicaid at existing eligibility levels. Access to Medicaid coverage remained stable over this period due to protections put in place under ARRA. Increases in enrollment stemming from the recession were the primary drivers of increased spending on Medicaid over this period. Looking over the last decade, Medicaid spending per enrollee has increased more slowly than growth in national health expenditures per capita and growth in private health insurance premiums. Despite the program’s success in holding down per capita cost growth, states are grappling with immediate budget issues related to the economic downturn and related state budget constraints coupled with the expiration of the enhanced federal Medicaid matching funds from the ARRA on June 30, 2011.

Given the level of cost-containment that has already taken place, additional reductions in Medicaid spending growth over time will depend on…broader efforts to reduce health spending across all payers

Enrollment has gone up while state revenues and budgets have been squeezed. In 2010-2011 the federal government increased the funds given to the states, effectively shouldering a greater burden of the Medicaid budget. But that extra money was a one year deal and is set to expire.

And so states, faced with budget deficits in large part attributable to Medicaid (for instance: Wisconsin’s shortfall over the next two years is made up in half by Medicaid costs) continue to struggle. And state lawmakers have been very prominent in vocalizing their displeasure with the situation. One of the problems is some of the restrictions on reducing Medicaid eligibility, basically striking some people from the rolls, that the Affordable Care Act places. Basically,

But what really makes this Medicaid fight different from ones that have come before is the impact of the health overhaul passed last year, which calls for a huge expansion of Medicaid in 2014 to low-income childless adults.

States won’t actually be on the hook for most of those costs; all but 10 percent will be paid by the federal government.

But between now and 2014, in order to get that federal money, governors basically can’t cut back on most Medicaid eligibility. That makes a lot of them, well, not very happy.

“I really believe that the federal government, with their maintenance of effort, have really tied our hands and not given us the flexibility to do what we do,” said Iowa’s Branstad. “I don’t mind being held accountable [but] I’d like to be able to set our own eligibility requirements.”

This part of the Affordable Care Act, and other provisions related to Medicaid funding, has actually been challenged in federal court along with the more media grabbing assertion that the individual mandate oversteps Congress’ authority. However the mixed success opponents, including the state Attorney Generals, have had within the judicial system, it is of note that no court has sided with the plantiffs when it comes to the requirement that the states maintain current Medicaid rolls if they want to be eligible for future federal Medicaid dollars come 2014.

And so state Governors have gone politiking,

Haley Barbour doesn’t have many nice things to say about Medicaid these days.

He says he’s frustrated with “people [who] pull up at the pharmacy window in a BMW and say they can’t afford their co-payment.”

And, he says, “Forgive me if I think people who work two or three jobs to pay for health care for their families shouldn’t be forced to pay for health care for people who can work, but choose not to.”

Some more fringe state lawmakers have even talked about opting out of Medicaid all together,

The Heritage Foundation, a conservative research organization, estimates Texas could save $60 billion from 2013 to 2019 by opting out of Medicaid and the Children’s Health Insurance Program, dropping coverage for acute care but continuing to finance long-term care services. The Texas Health and Human Services Commission, which has 3.6 million children, people with disabilities and impoverished Texans enrolled in Medicaid and CHIP, will release its own study on the effect of ending the state’s participation in the federal match program at some point between now and January.

Although that is, for all the talk, extremely unlikely,

“I can’t imagine Mississippi opting out,” [Barbour] said at a hearing on Capitol Hill Tuesday. “We’re a poor state, and it’s an important program. We want to run it better for taxpayers and beneficiaries. … I am not an opt-out advocate and I’m just being forthright about that.”

Medicaid is feeling the squeeze from the Great Recession. It will continue chugging along, but the promise of an expanded Medicaid helping to provide insurance to more than half the people theorized to be covered under the Affordable Care Act, well that might be too much to ask,

Obama’s new budget calls for spending $279 billion on Medicaid and the Children’s Health Insurance Program, down from $285.4 billion this year. In plain language, this means stripped-down health care coverage for the poor and bigger burdens for the states.