Feb. 16, 2006 – An independent economic analysis released yesterday found that under the presidentâ€™s proposed budget, states would have to pick up billions in Medicaid expenses, most likely forcing some to reduce services.
The federal spending cuts would come on top of funding those already approved by Congress this month and after several states unexpectedly began picking up the tab for the programâ€™s recently enacted prescription-drug benefit.
The White House budget released earlier this month would hack more than $35 billion in federal Medicaid expenditures over the next ten years, about $30 billion of which would be transferred to the states, the progressive think tank Center on Budget and Policy Priorities reported yesterday. The analysis found that most of the cuts are regulatory and need no congressional approval.
According to CBPP, the administration is seeking a net $5.1 billion in savings through legislation and another $30.4 billion by altering regulations utilizing executive branch powers. The newly proposed cuts top the ten-year, $26.5 billion cuts Congress just approved in its budget reconciliation package by a full $9 billion; if approved, would bring federal Medicaid cuts to $62 billion over the next decade.
The regulatory cuts include ending payments for the transportation and administrative expenses that school districts incur in educating youths with disabilities, leaving local and state governments to cover the costs, the study said. In addition, the Medicaid program would no longer pay matching funds for developmental treatment and therapy for people with disabilities and mental illness.
Together, those rule changes would curtail federal Medicaid spending by $15.2 billion, largely by forcing states to either pay for the services themselves or drop them altogether.
In addition, Bush proposes that Medicaid halt payments to hospitals for uninsured patients and halve the top tax rate that states are allowed to impose on healthcare facilities to pay for Medicaid-related services. The rate is presently 6 percent of gross profits.
According to the CBPP, these measures would bring another $14 billion or more in cuts.
"If the federal government shifts large Medicaid costs to the states, some states are likely to turn around and shift a substantial part of those costs to low-income beneficiaries," report author Andy Schneider said in a statement accompanying its release. "And since low-income people have nobody they can shift costs to, they likely will end up paying the price, partly in the form of less health care."
Medicaid is operated differently from state to state, with some, like New York, passing portions of the financial burden along to counties and local governments. Counties across the state have been forced to repeatedly enact tax hikes to fully fund the program.
Financial troubles related to Medicaid reimbursement plans have surfaced across the country in recent years. In San Joaquin County, California, political leaders are considering closing a county medical center due to delinquent federal Medicaid payments, the Stockton Record reported Wednesday.