States to reduce Medicaid funding

Significant budget shortfalls are causing most states to reduce current and projected funding for their Medicaid programs, the second-largest item in most states' budgets. Medicaid's average growth range was 3.6 percent between 1995 and 1998, but rose to 7.9 percent between 1998 and 2000. In March

A survey by the Kaiser Commission on Medicaid and the Uninsured found that 41 states plan to reduce their Medicaid funding growth in FY03. More than half of the states plan to change their prescription drug policies by seeking larger discounts and rebates on their purchases of prescription drugs, increasing their use of prior authorization and preferred drug lists, and requiring beneficiaries to use generic drugs. Twenty-eight states plan to cut or freeze payment rates for some providers.

In addition, 14 states have scaled back the benefits Medicaid provides, including dental, vision, and some women's health services. Nineteen states plan to initiate or increase beneficiary copayments for prescription drugs, and 15 states plan to begin charging beneficiaries copayments for services or to increase existing copayments. The survey also found that 18 states plan to reduce or restrict eligibility, 27 states are considering some type of waiver for their Medicaid programs, and some states are planning to move more people into managed care plans and institute new disease-- management and program-integrity programs.