States Weigh Options To Address Medicaid Budget Shortfalls, Higher Enrollment Rates

The following summarizes recent actions considered by states to address Medicaid budget shortfalls and rising enrollment numbers.

• Iowa: The state Legislature's Administrative Rules Review Committee voted unanimously on Jan. 24 to delay a scheduled 13.2% cut in payments to Medicaid providers until the end of the legislative session in April. The procedural move gives lawmakers additional time to determine how to cut $18.6 million from Medicaid's budget this year -- a reduction ordered by Gov. Tom Vilsack (D) as part of across-the-board cuts to the state budget. Besides reducing payments to providers, lawmakers are considering cutting the number of eligible beneficiaries, cutting optional benefits or shifting funds from other parts of the state budget. Lawmakers also are working to cover a $30 million Medicaid budget shortfall in fiscal year 2002, which may increase to between $70 million and $110 million in the next fiscal year (Okamoto, Des Moines Register, 1/25).
• Maine: Gov. Angus King (I) has proposed to delay for one year an expansion of income eligibility limits under Medicaid in order to cover the program's $248 million shortfall in this budget year (Bangor Daily News, 1/24). The state Legislature last year approved a bill (LD 1303) that would expand Medicaid coverage to childless adults with annual incomes up to 100% of the federal poverty level, or $8,592 for individuals and $11,610 for couples. The bill also included a provision that would increase the eligibility limits to $10,738 for singles and $14,513 for couples, provided that the state had enough money to cover the expansion (Kaiser Daily Health Policy Report, 6/22/01). The expansion would be funded through a "special" 6-cent tax on cigarettes and would cost the state about $4 million per year. The federal government would contribute $8 million per year in matching funds. The expansion, not yet approved by the federal government, requires the state to submit a waiver proposal to HHS (Bangor Daily News, 1/24).
• Massachusetts: An increasing number of radiologists, anesthesiologists and pediatric mental health providers are refusing to participate in the state's Medicaid program because they say that reimbursements are too low. The exodus of providers is occurring even though the state raised reimbursements for some office visits by 13%, the AP/Worcester Telegram & Gazette reports. As providers exit the program, beneficiaries are having difficulty accessing care, and many must travel to other cities for specialty care (AP/Worcester Telegram & Gazette, 1/28).
• Nebraska: In response to a state budget shortfall, Gov. Mike Johanns (R) has proposed reviewing the income eligibility of children enrolled in Kids Connection, the state's Medicaid expansion CHIP program, every six months, instead of once per year. Officials estimate that under the proposed legislation (LB 1095), about 4,500 children per month would be dropped from Kids Connection because of ineligibility, saving the state $3.7 million per year. Some legislators and child advocates have expressed opposition to the plan, saying it would increase the number of uninsured children (Hicks, (Lincoln Journal Star, 1/24).
• Nevada: State officials are concerned that the two-year, $513 million Medicaid budget -- which funds the program through 2003 -- will be insufficient to cover the program's growing caseload. Enrollment jumped 4.5%, or by 6,054 beneficiaries, between November 2001 and December 2001 -- "by far the biggest monthly increase" of 2001, the Las Vegas Review-Journal reports (Whaley, Las Vegas Review-Journal, 1/25). Charles Duarte, director of the state Division of Health Care Financing and Policy, which oversees Medicaid, said that the agency is reviewing the budget and soon will issue a report to Gov. Kenny Guinn (R) and lawmakers. Several options are available, state Budget Director Perry Comeaux said. For instance, if the number of beneficiaries exceeds what the state has budgeted, state officials could transfer $22 million in reserve funds to cover the program's costs. Should those funds be exhausted, the state then could use funds set aside for the second year of the budget to cover expenses in this year, a move that would sustain the program until February 2003, when the Legislature is scheduled to convene (AP/Las Vegas Sun, 1/17).
• North Carolina: Faced with a possible $108 million Medicaid budget shortfall this year and climbing enrollment figures, Gov. Mike Easley (D) has written to the state's congressional delegation seeking support for legislation that would help states with Medicaid costs through increasing the federal matching rate or giving extra federal aid to states with high unemployment rates (AP/Charlotte Observer, 1/25). North Carolina's Medicaid enrollment grew by more than 80,000 between December 2000 and December 2001, from 882,520 to 962,901 (Gardner/Barrett, Raleigh News & Observer, 1/25).