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Aaron Randle

Basic Critical Activity

Thinking Activity 3.4

Shrinking Medicaid Funds Pummel States

What is the problem?

States regularly get matching funds from the federal government to help cover Medicaid burdens. Now,
the feds are incrementally ramping down this enhanced match, before cutting it off completely July 1.

What are the alternatives?

To address the shortfall, state officials want to put more recipients into managed care programs,
eliminate or charge for certain services and slash rates to providers.

What are the advantages and/or disadvantages of each alternative?

I Advantages:

South Carolina is hoping to trim provider rates by 3% starting April 4 to help it close a $25 million deficit
in it’s Medicaid department this fiscal year. Since the federal health care reform law is preventing states
from slashing Medicaid rolls, they are leaning heavily on doctors, hospitals,nursing homes and other
providers to cut costs.

II Disadvantages:

Many nursing home operators say they could not afford to care for Medicaid patients for such low
payments, putting 45,000 elderly Texans at risk of losing their beds.”Medicaid’s growth is out of
control,” Christie said in his budget address last month. “We must manage it better.”
What is the solution?

“At this point, Medicaid bills take priority,” said Bradley Hahn, spokesman for Comptroller Judy Baar
Topinka. “We want to put every dollar we can toward those payments and save the states money.”

How well is the solution working?

In Texas, for instance, lawmakers are considering cutting provider rates by 10%, which would result in an
overall 34% reduction once federal matching funds are factored in. Many states, including New York,
New Jersey and Florida, are looking to enroll recipients in managed care programs to better control
costs.

money.cnn.com

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