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Medicaid Spending Grew at 9% Last Year, States Respond by Cutting Benefits

John on September 30, 2010 at 9:55 am

A Kaiser survey of Medicaid in all fifty states reveals that about one out of every six Americans is on Medicaid now. Enrollment and spending were up sharply last year, nearly 9%. In fact, the only reason states are getting by is because many of them a) froze reimbursement levels last year and b) divided up $87 billion in stimulus money from the feds. Even so, many states are running deficits. So what is the plan to get by? Simple, they’ll reduce coverage:

In FY 2010, 20 states implemented benefit restrictions, the largest number in one year since the surveys began in 2001 and double the number from FY 2009. In addition to this record level of benefit restrictions in FY 2010, 14 states have planned benefit restrictions in FY 2011. These benefit restrictions include the elimination of covered benefits as well as the application of utilization controls or limits for existing benefits. For example, several states eliminated all or some adult dental services including Arizona, California, Hawaii and Massachusetts. A number of states also imposed limits on benefits such as imaging services, medical supplies or durable medical equipment, therapies or personal care services.

Also from the Kaiser survey, here’s a chart of cuts that have happened and those planned for the coming year (click for full size):

So what happens when Obamacare actually kicks in?

Adding to the anxiety in state capitals is an expected surge in Medicaid enrollment due to a vast expansion of eligibility for the program under the new health care law. Starting in 2014, the expansion will make the program available to able-bodied adults with incomes up to 133 percent of the federal poverty level (currently $14,404 for a single adult and $29,326 for a family of four). Today, Medicaid, which was enacted in 1965, primarily serves children, pregnant women and the aged and disabled.

The government expects the Medicaid expansion to account for about half of the 32 million uninsured people who are projected to gain coverage because of the new law.

In other words, we’re about to pile another 16 million people on a system that is bankrupting states at current levels. In case you’re wondering, the current enrollment is around 45 million. So we’re talking about an additional 35% increase in three years.

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