US state Medicaid funding already squeezed in advance of federal cuts
4 November 2011As the economic crisis continues to crush US state revenues and drive up Medicaid enrollment, funding for the health care program for the poor is being further undermined by the drying up of federal stimulus funds, according to a report issued last week by the Kaiser Family Foundation.
Kaiser’s yearly 50-state Medicaid budget survey describes the effects of the ongoing economic crisis on Medicaid spending and analyzes coverage and policy trends in US states for fiscal years 2011 and 2012.
While deep, the cuts documented in the survey are pale in comparison to the cuts likely to be proposed by the federal deficit “supercommittee” at the end of this month. (See “ Washington austerity drive targets Medicare, Social Security ”) Whatever the specific outcome of that process, it is bound to slash benefits for millions of children, unemployed, and disabled workers.
Along with recent reports from the Massachusetts Medicaid Policy Institute (MMPI), the Kaiser survey gives the lie to claims that the high cost of treatment is at the root of the crisis. In part because of cost-cutting measures like higher patient co-pays and artificially low provider reimbursement rates, average per capita Medicaid spending often increases by only 1-2 percent per year. In Massachusetts, the rate of increase is lower than that of private insurers.
Instead, recent Medicaid cost increases have been driven by enrollment increases due to high unemployment. Nationwide, meanwhile, Medicaid enrollment increased by 5.5 percent in federal fiscal year 2011, while total Medicaid spending increased by 7.3 percent.
Medicaid is funded jointly by the federal government and the states, with federal matching funds determined according to a formula stipulated in the Social Security Act. Under this formula, the Federal Matching Percentage (FMAP) is inversely proportional to each state’s average personal income, with the highest federal matching percentages going to the states with the lowest average income. According to the Kaiser report, the range of federal matching in fiscal year 2012 starts at 50 percent and rises to about 74 percent for the poorest states.
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