Medicaid Cuts Continue To Hurt States
On Jan. 11, California Gov. Jerry Brown proposed eliminating $1.8 billion in state Medi-Cal funding-and sacrificing another $1.8 billion in federal matching funds-over the next 18 months as part of a sweeping effort to close the state’s $35 billion budget deficit.
But the reductions-half of which would come from cuts to provider reimbursements and half from new eligibility and benefit restrictions-would reverse many of the program’s most significant improvements since 1999 and wreak havoc on the state’s entire healthcare system, groups representing doctors, long-term-care providers, county welfare directors and the uninsured argued during a telephone conference held last week.
“Medi-Cal is the underpinning of our healthcare system,” said Mark Smith, president and chief executive officer of the California HealthCare Foundation, Oakland, which sponsored the discussion. “When you yank this much money out of the system, there will be a lot of unintended consequences.”
California is hardly alone. According to a study released last week by the Kaiser Commission on Medicaid and the Uninsured, every state except Alabama has cut or plans to cut Medicaid spending this year. But the Golden State may be among the hardest-hit, because it already spends less per enrollee than any other state.
Davis’ plan calls for cutting reimbursement rates to physicians, nursing homes and other providers by 15%. Such a move would essentially cancel out the 16.7% rate increase approved for physicians in August 2000 and scale back their reimbursements to 1985 levels, said Heather Campbell, assistant director of government relations for the California Medical Association, San Francisco.
“Running a business on 1985 rates in 2000 can pose quite a problem for physicians, so we’ve seen fewer and fewer physicians willing to take Medi-Cal patients,” Campbell said, adding that 45% of California doctors already refuse to see Medi-Cal patients. “And although the increase was very helpful in 2000, the rates are still extremely low. California ranks 42nd in the nation for the rates we pay providers, and a 15% cut could take us to 50th.”
James Gomez, president and CEO of the Sacramento-based California Association of Health Facilities, which represents the state’s long-term-care providers, said the rate cuts would wipe out the increases nursing homes have received in recent years to boost their staffing levels, and could lead to the bankruptcy of 300 to 400 such facilities.
And though the rate reductions wouldn’t affect hospitals directly, the state’s overburdened emergency rooms would be further strained as more physicians and nursing homes are forced to shut their doors to Medi-Cal patients, officials said. “We’re going to see hospital backup,” Gomez said.
All told, about half a million adults, or 8% of the state’s 6.5 million Medi-Cal beneficiaries, would lose their coverage under Davis’ proposal. To qualify, a family could earn no more than 61% of the federal poverty level, or $12,000 for a family of four, down from 100% of the federal level, or $18,000.
Medi-Cal beneficiaries also would be required to fill out forms verifying their income and eligibility each quarter, instead of annually. State officials said this alone could cause 193,000 adults to drop off Medi-Cal, either because they no longer meet the requirements or because they simply can’t keep up with the paperwork.
Adults who remain eligible for Medi-Cal would see fewer benefits. The governor has proposed scrapping 18 of the 34 optional benefits now available to Medi-Cal enrollees, including artificial limbs, dental care, eyeglasses, hospice care, medical supplies such as inhalers and diabetic testing strips, physical therapy and wheelchairs. The cuts would not apply to nursing home residents or children.
“These are real, immediate threats to personal health. They are not to be viewed as `optional’ benefits,” said Lark Galloway-Gilliam, executive director of Community Health Councils, a Los Angeles-based healthcare advocacy group for the uninsured.
The panel discussion kicked off what is expected to be an aggressive lobbying effort by healthcare advocates opposing Davis’ budget proposal. Both the CMA and CAHF said they were prepared to sue the state if they cannot persuade the Legislature to veto the proposed Medi-Cal cuts. California lawmakers have until June 15 to recast Davis’ plan.
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