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Positions on Medicaid stiffen

The Bush Administration’s efforts to address the rising costs of Medicaid came under attack again by state governors from both parties.
The Bush budget proposal includes cuts of $40 billion in the program, at a time when program costs have been increasing at an annual rate of 9% for each of the last four years. Governors are concerned not only with the proposed cuts, but also want to have more freedom to broaden coverage to other uninsured populations. At present, this requires a waiver, which can only be obtained after a somewhat cumbersome and time-consuming process involving the Centers for Medicare Services (CMS).
According to the Associated Press, there is an uncommon amount of bipartisanship evident in the governors’ pronouncements…
“One thing governors feel, Democrats and Republicans alike, is that we have a health care system that, if you’re on Medicaid, you have unlimited access to health care, at unlimited levels, at no cost,” said Arkansas Gov. Mike Huckabee, a Republican. “No wonder it’s running away.”
Republicans have been the most sweeping in their push toward market reforms, aiming to encourage patients to spend Medicaid dollars more wisely. Democrats, however, also are turning to concepts that require people on Medicaid to bear part of the costs, through copays or deductibles. Most try to spare additional costs, or cuts, from children and the poorest of the poor.”
Medicaid funds come from state and federal coffers, with the feds’ contribution tied to the state’s average income level (New York gets less, Mississippi gets more). Thus, any cuts in federal dollars either have to be made up with state funds, or programs cut. My bet is providers will see their reimbursement rates affected.
As Medicaid takes a hit, providers will likely seek alternative revenue sources.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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