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Medicaid Budget Cuts in Ohio and Utah

The financial and real estate markets' far-reaching slump is beginning to rear its ugly head in state-funded programs, such as Medicaid. States are wrestling with the economic implications of the downturn, trying to balance a decrease in revenues combined with an uptick in unemployment and an increase in Medicaid eligibility. As a result, trimming Medicaid services is occurring in several states.

This week talk of Medicaid budget cuts have been reported in Utah and Ohio. According to The Salt Lake Tribune, in Utah, the Department of Health is proposing a 3% reduction to spending, primarily through a $10 million cut to the Medicaid program, which results in a loss of $23 million in matching federal funds. Optional Medicaid services, such as vision care and physical therapy would vanish and an average 2% increase in provide inflation would be rolled back. In addition, eligibility for help may become tougher. For example, pregnant women, with the exception of those who are high risk, could see the amount of assets they can receive drop significantly from $5,000 to $3,000.

Meanwhile in Ohio, Fox news has reported that the Department of Job and Family Services is cutting approximately $80 million from its budget in an effort to comply with Governor Ted Strickland's request that state agencies cut 4.75% from their budgets. The Governor's request is an effort to address the looming $540 million deficit in the state's two year budget. As a result, the Department is cutting back on adoption services, Medicaid fraud detection activities and a state-federal program that works to transition people from welfare to work.

Other states are feeling the same budget crunch. Concerns are rising over the economic downturn and the impact on Medicaid enrollment, which is likely to increase, while state revenues are simultaneously decreasing. According to statistics from The Urban Institute, a 1% increase in unemployment would increase Medicaid enrollment by 1 million (approximately 600,000 children and 400,000 non-elderly adults). The resulting price tag of these projections is an increase of $3.4 billion, including $1.4 billion of state spending. Since there is no cap on the number of enrollees, if an individual is eligible; the state must legally provide services. Since all states are required to balance their budget, these outcomes could be catastrophic and potentially call for federal fiscal relief.

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The Kaiser Commission on Medicaid and the Uninsured released a report September 29, 2008 titled, "Headed for a Crunch: An Update on Medicaid Spending, Coverage and Policy Heading into an Economic Downturn." The report provides information gathered through a 50-state survey of state officials on Medicaid and state budget actions. The report can be found here: http://www.kff.org/medicaid/7815.cfm.
# Posted By Kristina Mulholland | 9/29/08 1:11 PM