Medicaid: under the weather: states are facing growing numbers of people in need of medical care, and even billions from the economic recovery package will not solve all their problems.

• Author: Brand, Rachel
• Position: Cover story

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Stone-faced and desperate, the unemployed father pleaded with Nevada's lawmakers.

Doctors refused to operate on the out-of-work pharmacist's daughters Hannah, 8, and Zaynah, 5. The girls suffer from cerebral palsy and leukodystrophy--the progressive degeneration of the brain's white matter--and need surgery. The girls qualify for Medicaid, but the state's health care program pays so little that physicians have shut their doors to Medicaid patients.

"It breaks your heart," says Nevada Senate Majority Leader Steven Horsford. "People think only low-income people need access to health care, but it shows that everyone is struggling."

In recent months, scenes like this have played out in state legislatures across the country. The severe fiscal crisis has led some two dozen states to enact or propose wrenching cuts to health insurance programs for the poor. Legislators took aim at Medicaid, the state-federal program for the poor and disabled, because it is one the largest pieces of the states' budgets.

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The federal economic recovery package throws states a lifeline. It increases the federal portion of Medicaid payments by 6.2 percent, and gives additional funds to states with high unemployment. The package runs from Oct. 1, 2008, to the end of 2010. States will get about $87 billion in new money for five months of past expenses and pay fewer matching funds for almost two years.

The timing hits the bull's-eye because almost every state is adjusting its 2009 budget and looking at its FY 2010 budget.

STILL STRUGGLING

Yet for states facing deep budget shortfalls, it is doubtful the subsidy can reverse earlier payment and benefit cuts.

"The stimulus will require states to restore any eligibility cuts" made after July 1, says Ann Kohler, director of the National Association of State Medicaid Directors. "But it will not be enough to restore other cuts."

The problem is that there is a growing need for Medicaid as more people lose their jobs. For every I percent increase in unemployment, 1.1 million people become uninsured, according to the Kaiser Family Foundation. Of those, some portion are eligible for Medicaid. Inevitably, the longer the recession persists, the more likely it is that unemployed people with families will become eligible.

A January 2009 New York Times survey found that from 2007 to 2008, 16 states saw enrollment increases of more than 5 percent. Many are predicting further increases. Nevada officials expect that by 2010, Medicaid enrollment will rise by more than 30 percent from 2008 levels.

Another Medicaid problem haunts states. Even in good times, health care costs are skyrocketing faster than state revenues. Each year Medicaid gobbles up a greater piece of the budget pie.

"We are hearing from states, 'This is helpful, but keep up the work. We need more help,'" says Kathleen Stoll, deputy executive director at Families USA. States want the federal government to lend a greater hand in restructuring the program.

MEDICAID BASICS

Federal rules require those eligible for Medicaid be given certain services. States can't establish waiting lists or cap enrollment for those considered part of mandatory groups or they lose federal funding.

The federal government requires Medicaid to provide physician and hospital-based care for very low-income pregnant women, children under age 6, the low-income elderly, the disabled and a small set of parents.

In addition, the state must pay for nursing care for very poor elderly and disabled people. Every state...