GOVERNMENT & MEDICINE

States may get Medicaid money now, but pay for it later

The reform proposal could tempt states to gamble the future of their programs to save them for the present.

By Joel B. Finkelstein, AMNews staff. Feb. 17, 2003.

Washington -- A Bush administration proposal aims to ease the Medicaid financial squeeze, common in many states, in the hope that programs can find long-term relief by cutting future spending.

If the money problems facing Medicaid programs are put off for now, doctors may avoid the payment cuts many states are considering to keep their programs alive. At the beginning of the year, 37 states planned to freeze or reduce payments to physicians and others.

Under the administration proposal, the states would get a share of an additional $12.7 billion dollars over seven years. To participate, states would be required to restructure their programs into two allotments, one for acute care and one for long-term care.

The plan promises to allow states to keep covering optional Medicaid populations for the near future, but could put the programs in a precarious financial situation once the infusion of cash runs out in 2010.

The Dept. of Health and Human Services is gambling that most states would take the deal for a portion of the extra money that should help ease the pain of making the transition to a new system of federal cost sharing.

Governors and health policy experts have been calling on the administration and Congress to shore up states' waning budgets with more federal Medicaid funds. Many state programs have been strained by the weak economy, combined with a wave of new patients driven by boom-time enrollment initiatives.

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