With every state in the union facing
budget deficits and massive long term liabilities for health care and retirement programs, Governors are looking for ways to cut costs. One of the big ticket items in every state budget is Medicaid which accounts for about 20% of most state budgets. Medicaid provides health care for those under 133% of the poverty line who are not yet old enough to be eligible for Medicare.
Medicaid enrollment (and therefore costs) have increased sharply because of the bad economy. For instance, it was reported this week that Medicaid applications in Nevada
are up 60% compared to two years ago. That works out to 10,000 new applicants every month.
Add to this the fact that the new health reform law, i.e. ObamaCare, expands coverage to millions who were previously uninsured by pushing them into Medicaid. Estimates are that administration alone could cost states
an additional $12 billion.
In order to avoid a threatened revolt, HHS sent
a letter to the Governor of each state suggesting ways to trim Medicaid costs and promising to work with them during the coming transition. The real issue, as the
NY Times notes, is whether states will be allowed to tighten up eligibility standards. In response to these requests, HHS Secretary Sebelius has said that she is “studying” the issue. In other words, no.
In order to keep from being submerged in a tide of red ink, states are pushing for more “
managed care” of Medicaid patients. Essentially, states pay
private insurers a fixed monthly or annual rate to deal with Medicaid patients. This is the final irony.
Even as President Obama casts private insurers as the enemies of reform, states are turning to these same insurers to bail them out and, ultimately, make Obamacare workable.
Oh the irony!
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