Major Medicaid cuts appear likely

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U.S. Congress

The Congressional Budget Office estimates that federal Medicaid spending will decline for just the second time in the program’s history in 2012, potentially reducing services for millions of low-income people, many of which have disabilities.

In February 2009, Congress approved a large increase in federal Medicaid spending as part of its stimulus package, to compensate for potential cuts by state budgets as a result of rapidly dropping tax revenue. As Congress remains focused on deficit reduction, this aid, which was extended for six months in December at the urging of the White House and state officials, is likely to expire in July, according to an article in the New York Times.

“We all see the reality of what’s going on in Congress,” said Mark W. Rupp, director of the Washington office of Washington State Gov. Christine Gregoire of Washington State, the chairwoman of the National Governors Association, in the article. “It’s more about cutting than spending. Why put a lot of effort into something that did not seem likely to have a positive outcome? It would have been fairly futile.”

As a result, the federal government’s share of spending on Medicaid, which is jointly financed by federal and state governments, is projected to drop from 67 to 57 percent nationwide.

As states continue to struggle with closing their budget deficits, governors nationwide have made a variety of reforms during the past year to reform their state’s Medicaid spending.

“To hold down costs, states are cutting Medicaid payments to doctors and hospitals, limiting benefits for Medicaid recipients, reducing the scope of covered services, requiring beneficiaries to pay larger co-payments and expanding the use of managed care,” according to the article.

New York, for example, has capped Medicaid spending, making it one of 20 states that has limited benefits in some form. California is one of 24 states cutting Medicaid payments to doctors and other providers, which will likely lead to accept fewer patients.

Medicaid provides services to more than 50 million people nationwide, include more than seven million with disabilities.