States likely to see little help with Medicaid funding

Plans to crack down on a state funding mechanism are expected to reduce the federal share of spending on the program.

By Joel B. Finkelstein, AMNews staff. April 12, 2004.

Washington -- At a time when states are struggling with Medicaid spending, the federal government is looking for ways to limit its share of the costs.

The Bush administration's budget proposal for fiscal year 2005 includes a $23.5 billion reduction in the federal contribution to Medicaid over the next 10 years. The nonbinding budget outline, which is meant to guide Congress, does not specify from where this money would come.

This squeeze would leave state legislatures with little choice but to continue paring back program spending to stay within ever-tightening state budgets, experts said.

Most states already have new Medicaid cuts in the works for this year and next.

Some experts warn that the result will be less access to care. Frozen and reduced payment rates have increasingly forced physicians out of the program, said Michael O. Fleming, MD, president of the American Academy of Family Physicians.

In many states, it costs physicians more to see Medicaid patients than the program pays them.

Those who still can afford to accept Medicaid patients are forced to carry a heavier load or limit the number of patients they see, often making waiting times prohibitive. The situation is even more difficult when trying to refer patients to specialists.

The tension is straining what have been generally good relations between the medical community and state governments. "They are doing the best they can with the revenue they have," Dr. Fleming said.