South Carolina Healthcare Voices

Medicaid advocates breathed a collective sigh of relief when the debt debate wrapped up early this week. The entitlement program, initially seen as vulnerable in negotiations, was protected from across-the-board cuts in the trigger deal.

A federal exemption, however, is only half the story. States, who also foot a big chunk of the Medicaid bill, also shape the program. Looking at crunched budgets, states are weighing some big changes to their Medicaid programs that could vastly reshape the program’s financing.

“Don’t think things can stand still just because Medicaid was exempted,” says Tevi Troy, an official with the Department of Health and Human Services under President George W. Bush and a senior fellow at the Hudson Institute. “It cannot stand still with states looking at the expected growth level. Standing still really isn’t an option.”

Enhanced funding for Medicaid included in the stimulus ran out last month. States will spend an additional $16 billion of general fund revenues on Medicaid next year, the National Association of State Budget Officers recently projected. That’s at the same time that states will likely slash funding for education, public assistance and transportation.

Facing numbers like these, many states are clamoring for permission from the Obama administration to overhaul their programs to reduce costs. Last month, Utah proposed modifying its delivery system to look like the Accountable Care Organizations envisioned in the health reform law. (more…)