Medicaid Places Pressure upon States
By Scott Hammer.

With the passage of the Patient Protection and Affordable Care Act, the US economy and its health care system will be looking forward to a serious expansion of its charitable health care program, Medicaid. In 2014, eligibility for Medicaid will expand to include income levels of up to 133% of the federal poverty level. This could provide coverage for an additional 15 million individuals.

While the quest to cover more individuals may appear to be noble and valiant, this Medicaid expansion comes at a time when state budgets are hitting a massive crunch. Some states today are even delaying Medicaid payments in order to meet their budget shortfalls. With increased enrollment due to the economic downturn and the forthcoming increase of eligibility from program expansion, Medicaid beneficiaries will place a heavy burden upon states to provide comprehensive health care coverage. This expectation of future Medicaid coverage for eligible beneficiaries seems rather unrealistic based upon the current challenges to state budgets.

In addition, reimbursement rates for Medicaid don’t come close to that of commercial insurance. Medicaid places significant pressure on hospitals and providers to manage their finances in order to maintain viable business enterprises. While this reality holds health care companies financially responsible, many providers refuse to accept Medicaid patients because of their low reimbursement profile, and thus avoid serving the Medicaid population completely. Future access to providers for Medicaid recipients could become extremely limited. President Obama has recognized the challenges and shortcomings of low reimbursement rates in Medicaid and has acknowledged that they should be changed.

Efforts to alleviate these pressures upon states will potentially come through bill provisions in the form of increased federal FMAP “matching” rates offered to new Medicaid populations in 2011, and through increased Medicaid payments to primary care providers in 2013. Health care provisions by way of innovation towards lower health care costs and payment to physicians based upon value over volume (by 2015) could also make positive improvements for states. Each of these efforts could provide incremental solutions for states to address reimbursement mismatch, despite the fact that the Federal government will be paying for such measures.

As Medicaid Payments Shrink, Patients Are Abandoned The New York Times – March 15, 2010
States Consider Medicaid Cuts as Use Grows New York Times- Febuary 18th 2010
Press Release Health Affairs – April 28th 2010
Michigan Department of Community HealthSurvey of Physicians – January 2010
State delays payments to meet budget shortfall The Magic Valley Times – March 27 2010