Cuts to Medicaid and a Supreme Court Hearing Looming Ahead

Ernie Shannon's picture

While mandated contraception coverage and requirements that every American carry some form of health care insurance has vacuumed up most of the attention focused on health care reform, the issue of Medicaid funding is slowly becoming the elephant in the room no one wants to discuss.

With Medicaid costs skyrocketing, the federal government is soon to impose another round of spending cuts on the program and most of it will come from payments to health care providers – cuts anywhere else would be too controversial, especially in an election year. In a recent article published in the New England Journal of Medicine, John Iglehart revealed that at the same time cuts are rolling out, many state Medicaid programs are moving forward to expand their contracts with managed-care plans that offer more integrated approaches to the management of care.


“In recent years, as in previous recessions, states have experienced large increases in Medicaid spending as more people become unemployed and enrolled in the program,” Iglehart said. “To help close their budget deficits, some states are reducing payments to physicians, hospitals, and nursing homes.” These key health care providers are not shielded from government payment cuts as are managed-care institutions that have some protection by virtue of federal rules that states pay actuarially sound rates to providers.

If the rising costs of Medicaid and the looming cuts at the state level aren’t enough, the U.S. Supreme Court surprised health care experts when it decided to consider questions regarding whether Congress exceeded its authority by expanding Medicaid and obligating states to cover some of the expense. Even though the general mandate for insurance coverage is top on the docket when the Supreme Court hears arguments concerning the Affordable Care Act in late March, the Medicaid discussions could be as important. When and if the Affordable Care Act is fully functioning, every American under the age of 65 with income levels at or below 133% of the federal poverty level will be eligible for Medicaid. The question is, did Congress overstep its bounds.

Fires at the federal level aren’t all that’s causing smoke in Washington, D.C. In California, providers and Medicaid beneficiaries are suing the state of California for daring to cut Medicaid reimbursement rates. While provider concerns aren’t surprising, beneficiaries have taken their side by arguing that the cuts threatened to seriously erode access to health care in the state. In other words, physicians and other providers will flee the state for more welcoming arms where reimbursement rates are still acceptable.
All of these issues and more portent turbulent years ahead for a program the Affordable Care Act depends on to fulfill a significant portion of the health care services mandated by the act.


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