Rising Costs Prompt States to Reduce Medicaid Further

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> Rising Costs Prompt States to Reduce Medicaid Further

>

> By ROBERT PEAR

>

> WASHINGTON, Sept. 22 Struggling through a third consecutive year of fiscal

> distress, states have again squeezed Medicaid, the nation's largest health

> insurance program, by scaling back eligibility, cutting benefits,

> increasing co-payments and freezing or reducing payments to doctors and

> hospitals.

>

> Vernon K. Smith, former Medicaid director of Michigan, said today that

> soaring health costs and plunging state revenues had forced virtually

every

> state to take action to slow the growth of Medicaid, the health program

for

> 51 million Americans.

>

> Economists and state officials said the cutbacks indicated the intense

> pressure on the states as a result of declining tax receipts.

>

> The outlook for Medicaid remains grim, the officials said, because state

> revenues are expected to grow much more slowly than the economy, and

> inflation in health care is not expected to abate in the coming year.

>

> " The fiscal crisis facing states is far worse than the condition of the

> nation's economy, " said Donald J. Boyd, director of fiscal studies at the

> Rockefeller Institute of Government, an arm of the State University of New

> York. State tax revenue dropped sharply even as the nation's economic

> output grew at a slow pace in the past year, Dr. Boyd said.

>

> Mr. Smith interviewed officials in all 50 states in an annual survey

> conducted for the Kaiser Commission on Medicaid and the Uninsured, a

> private group created by the Kaiser Family Foundation.

>

> In the 2003 fiscal year, Mr. Smith said, 25 states restricted eligibility

> for Medicaid, 18 reduced benefits, and 17 increased co-payments. Moreover,

> he said, 21 states cut payment rates for one or more groups of health care

> providers.

>

> For example, Mr. Smith said, Medicaid payment rates for doctors were cut

in

> 5 states and frozen in 36, while rates for hospitals were reduced in 9

> states and frozen in 22.

>

> The federal government and the states share the costs of Medicaid. Federal

> Medicaid spending soared 13 percent in the 2002 fiscal year, to $147.5

> billion, and has increased again in 2003, though at a slower rate, 9.2

> percent, the Congressional Budget Office said.

>

> A sluggish economy and rising unemployment have reduced incomes for

> millions of families, increasing the number eligible for Medicaid.

>

> Twenty states reported that increased enrollment was the biggest factor

> driving up the cost of Medicaid. Sixteen cited prescription drug costs as

> the biggest factor.

>

> John F. Holahan, director of health policy research at the Urban

Institute,

> said increased enrollment of the elderly and the disabled accounted for

> nearly 60 percent of the growth in Medicaid spending in the past two

years.

>

> The Medicaid director in Ohio, Barbara Coulter Edwards, said the recent

> Medicaid cuts had unquestionably caused hardship for some. But, she said,

> Congress averted deeper cuts by providing the states $20 billion in

> temporary fiscal relief, including $10 billion for Medicaid.

>

> For years, doctors have complained that Medicaid paid them less than most

> other insurers. Dr. Susan Fleischman, medical director of the Venice

Family

> Clinic in Los Angeles, said payments were so low that many doctors refused

> to take Medicaid patients.

>

> " We will be issuing Medicaid cards, " Dr. Fleischman said, " but it won't

> mean anything because people cannot get in to see a doctor. In parts of

Los

> Angeles, children have to wait weeks to see an ear, nose and throat

doctor,

> a neurologist or an orthopedist. "

>

> Nearly all states reported taking action to rein in prescription drug

costs

> in the past year. Thirty-two expanded the list of medications requiring

> special approval, known as prior authorization. Fourteen established lists

> of preferred drugs for certain conditions and discouraged doctors from

> prescribing other medicines. Four required greater use of low-cost generic

> drugs. Five imposed monthly limits on the number of prescriptions that

> could be filled. Fourteen established new or higher co-payments for drugs.

>

> Medicaid officials said they needed to be careful in clamping down on the

> use of prescription drugs.

>

> Robert Day, the Medicaid director in Kansas, said psychiatric drugs

> accounted for at least 30 percent of his state's Medicaid drug spending.

> " Those drugs have been a miracle for people with serious, persistent

mental

> illness, " Mr. Day said.

>

> Daniel N. Mendelson, president of Health Strategies Consultancy, said,

> " Prescription drugs account for 15 percent to 25 percent of total Medicaid

> spending, and Medicaid drug spending has increased much more rapidly than

> the rest of the program. "

> http://www.nytimes.com/2003/09/23/national/23MEDI.html?th

>