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Proposed Medicaid Cuts: What They Mean to VirginiansBy Desiree Parker Monday, March 01, 2010 The state House and Senate released their individual proposed budgets earlier this week, and a number of the cuts target different aspects of Medicaid that could have a huge negative impact on the people who rely on the program for services.WYDaily spoke with two representatives at the Commonwealth Institute for Fiscal Analysis, a group that looks at state fiscal issues with particular attention to impacts on low and moderate income people. The group is closely watching the unfolding state budget process. Michael Cassidy, the group’s executive director, and Policy Director John McInerney explain how Virginia’s Medicaid system works and what some of the ramifications would be if the current proposed cuts in the House and Senate budget bills are approved. About Medicaid in Virginia Medicaid is a means-tested health assistance program that’s jointly funded by the federal government and the state and managed at the state level. All 50 states participate, but they each receive different levels of federal funding. The federal portion is based on each state’s poverty level, with wealthier states (like Virginia) getting a match of 50 percent and poorer states getting more federal funding. Though the program is intended to get health services to people who need it most, Cassidy points out right now about 60 percent of poor Americans aren’t covered by Medicaid. Virginia, though it is considered able to pay more, pays very little for the program compared to other states. Virginia is ranked 48 out of 50 in per capita Medicaid spending, according to Cassidy. Like other states, the recession has caused increased enrollment in Medicaid programs as people have lost jobs and insurance. At the same time, Virginia has seen a sharp decline in revenues – a typical problem during recessions, Cassidy says. One difference during this recession was the addition of federal stimulus money (through the American Reinvestment and Recovery Act). These funds increased the federal portion of Medicaid funds in Virginia from 50 percent to 61 percent, which brings the state portion from 50 percent down to 39 percent. The stimulus money, which has pumped $1.4 billion into Virginia’s Medicaid system, is due to run out on December 31. So the state is not only facing higher demand and lower revenues, but also a cut in federal aid – though there is federal legislation currently being considered that might grant a six-month extension to the stimulus support to Medicaid, McInerney says, which might mitigate some state cuts, too. Highlights of proposed cuts The House and Senate budget bills are different, but both propose cuts to Medicaid eligibility requirements as well as cuts to providers who serve Medicaid recipients (generally through reductions in reimbursement rates). Long-term trends indicate fewer people are getting insurance through their job, Cassidy says, and there are very few affordable options for getting healthcare in Virginia for low-income families. Children have the option to enroll in the State Children’s Health Insurance Program (SCHIP) called Family Access to Medical Insurance Security (FAMIS), which is a jointly funded program that is not the same as Medicaid, but could face state cuts as well. The House budget recommends a reduction in eligibility in the FAMIS program, which would save $37.6 million. Like Medicaid, though, SCHIP is a program that has a federal match portion. A cut to this funding “could add up to very significant losses in the state” when the federal portion is considered, says McInerney. He estimates there could be a loss of over $60 million (the federal portion is about 65 percent in SCHIP). “Even by government estimates, over 30,000 kids could lose [health] coverage,” McInerney says. “That’s a particularly harsh reduction, and could eat into [enrollment] gains.” Last year, 155,000 children were enrolled in Virginia’s SCHIP program. The Senate budget does not recommend changes in SCHIP eligibility. Another cut in Medicaid proposed in varying degrees in both budget bills are cuts in payments to service providers, which both men also believe will have a big impact. The Senate budget suggests reducing these reimbursement rates by $226.1 million; the House also suggests cuts. This would be like a large insurance company reducing reimbursement rates for providers; if patients’ coverage will pay less, it encourages providers to turn those people away. The consequence, Cassidy says, would likely be more trips to the emergency room, which is very expensive (to taxpayers, who foot the bill for patients who have no insurance). The other option for people who can’t afford healthcare or can’t find a local provider that accepts Medicaid is to turn to free clinics for service, but these organizations (like Lackey Free Clinic and Olde Towne Medical Center) are facing reductions in funding and donations at the same time they’re looking at more people walking through their doors. “Their sources of income are also pressed,” Cassidy points out, “and though they try to fill in the gaps [in coverage], they can’t do it all.” Other changes that may cause a significant impact are reductions in the Senate bill that reduce services for the elderly and disabled, which would amount to about $36 million, according to McInerney. His organization is currently analyzing these cuts. “In general, Virginia runs a lean and mean [Medicaid] program to begin with,” says Cassidy. “This is why healthcare advocacy groups and providers are up in arms about cuts [to Medicaid].” Visit the Commonwealth Institute’s Web site for more information about the organization. Senate Bill cuts to Medicaid and FAMIS (FAMIS is the SCHIP program in Virginia) |
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