Medicaid—the nation’s major public health insurance program for low- income people in America— finances health and long-term care services for approximately 47 million people. Medicaid was established in 1965, at the same time as Medicare, to provide low-income people with access to health care. In 2003, the United States government allocated seven percent of federal spending—$157 billion—for Medicaid. Last year, Medicaid funding, which is administered by states and financed jointly by states and the federal government, added up to $258 billion, $147 billion of which was the federal share.
Though more than 41 million people in the U.S. are without health insurance today, imagine how many more would be uninsured without the protections provided by Medicaid. This program represents a significant commitment of federal and state governments to provide health coverage for those most in need. In 2002, Medicaid provided health coverage for 24 million children (1 in 4 children), 10 million adults (primarily low-income working parents), five million seniors, and eight million persons with disabilities. To qualify for Medicaid, one must meet financial criteria (have low income) and be “categorically eligible.” Eligible categories include pregnant women, children, older adults, people with disabilities, and parents.
However, because of the slow economy and rising health care costs, Medicaid is in trouble. As noted by the Kaiser Family Foundation, “Medicaid is caught in a crossfire between the rapid deterioration of state revenues, on the one hand, and increasing health care spending, on the other.” Just as unemployment is rising, the number of Americans without health insurance is growing, and because the timing of an economic recovery is uncertain, states could be forced to dramatically decrease the funding and eligibility for the Medicaid program.
Many states are now facing severe fiscal crises. A National Conference of State Legislatures’ (NCSL) survey reported in February that two-thirds of the states must reduce their budgets by nearly $26 billion by June 30, which ends the current fiscal year in most states. NCSL also noted that states already had addressed a $49.1 billion shortfall when they crafted their fiscal year 2003 budgets. The news gets worse when looking ahead to planning budgets for FY 2004. NCSL’s survey showed that state legislatures face a minimum $68.5 billion budget shortfall for FY 2004; and that number could increase (about 1/3 of states could not provide an estimated shortfall to NCSL’s survey). In addition, with the federal government focused on other priorities, namely the war in Iraq and homeland security, funds for Medicaid will be even harder to come by.
What does this mean for Medicaid beneficiaries? Because Medicaid is the second largest state expenditure (second only to primary and secondary education), states will be faced with trying to balance their budgets and will be forced to cut costs – including state resources available for Medicaid.
Medicaid cutbacks have already begun. The Kaiser Commission on Medicaid and the Uninsured surveyed all 50 states and the District of Columbia to better understand the cost containment strategies they had embarked on or were planning. They found that 49 states reported planning or taking action to reduce the growth in Medicaid spending for FY 2003. Specific state plans and actions include:

• Reducing or freezing provider payments (37 states);
• Prescription drug cost controls (45 states);
• Reducing benefits, including dental coverage, occupational or physical therapy, and inpatient hospital days (25 states);
• Reducing eligibility (27 states); for instance, Massachusetts plans to eliminate coverage for 50,000 individuals, effective April 1, 2003, and
  Increasing co-payments (17 states).

In Washington, D.C., federal policymakers have developed various strategies to deal with the state fiscal crises and the impact they could have on Medicaid beneficiaries. Below, find two of the policy options under consideration on Capitol Hill: one offered by President Bush, and the other suggested by a bipartisan group of Senators.
In his FY 2004 budget proposal released in February, President Bush recommended significantly altering the way Medicaid is funded and administered. States could choose to keep their Medicaid program the same—and receive no increase in funding from the federal government—or they could choose to enter into an optional program to turn their federal Medicaid and SCHIP (Children’s Health Insurance) funding into a capped grant. Through the optional program, President Bush suggested that states be required to continue comprehensive Medicaid coverage for those beneficiaries whose income levels are low enough that the federal government mandates that they be covered (roughly 2/3s of beneficiaries). But for the one-third of current beneficiaries who are now covered at states’ discretion, states would be able to change Medicaid rules and regulations, alter and simplify eligibility requirements, and restrict or cut benefits.
The proposal also calls for a significant shift in federal funding for Medicaid – instead of the federal government providing states with funding based on the number of recipients, the federal government would shift to a fixed payment based, not on the number of recipients, but on the cost of health care. To encourage states to sign up for this optional program, the President’s proposal would increase the federal share of funding to states ($3 billion in new money for the states next year — part of an additional $13 billion they would receive over the next seven years). However, that increased funding would be offset in years 8, 9, and 10, when states would be required to pay back all of the $13 billion they gained in the first 7 years.
A bipartisan group of Senators have been pushing for another option; a temporary increase in federal funding for Medicaid. Senators Jay Rockefeller (D-WV), a Presbyterian, Susan Collins (R-ME), Ben Nelson (D-NE), and Gordon Smith (R-OR) introduced legislation (S 138) to provide $20 billion in fiscal relief to states, in part by a temporary increase in Medicaid matching rates. Representatives Peter King (R-NY) and Sherrod Brown (D-OH) introduced similar legislation in the House of Representatives. On March 20th, as a sign of Senate support for state fiscal relief, the Senate voted, by a wide margin (80-19), that it was the sense of the Senate that the budget resolution should include at least $30 billion in state fiscal relief, at least half of which should be provided for Medicaid.
There are already more than 41 million people living without health insurance in this country. Without Medicaid, millions more Americans would be without health coverage. At last year's Presbyterian Church (USA) General Assembly, commissioners adopted a resolution, “On Advocacy on Behalf of the Uninsured,” which called upon Presbyterians to advocate at all levels on behalf of low-income and fixed income immigrant populations who lack health insurance. It also called on the PC(USA) Washington Office to “urge the expansion of Medicaid to insure more low-income and fixed income persons, including the recently unemployed.”
The administration’s Medicaid proposal could have a devastating impact on Medicaid. While it proposes initial additional inflows of federal funding into the program, it reduces funding by an equal amount in later years. It would also change the funding stream, from paying for the care of individual recipients to capped grants to states, and make it easier for states to limit eligibility for Medicaid.
State fiscal relief, while not a long-term solution to Medicaid funding, would give states much needed relief to pay for Medicaid, and to keep millions in the health care system. Contact your Members of Congress and urge them to fight for state fiscal relief, particularly relief for Medicaid, in the FY 2004 budget. Tell them to expand Medicaid to insure more low-income and fixed income persons, including the recently unemployed.

What you can do:

Call the Capitol Switchboard at (202) 224-3121 and ask to be connected with your Member of Congress.

Sample Script: “As you know, our state is facing a budget crisis and needs more, not less, federal funding for Medicaid. Please support state fiscal relief to increase the federal share for Medicaid. In addition, please oppose any cuts in federal Medicaid spending in the budget conference committee and in the final budget. Thousands of seniors, children, and people with disabilities in our state rely on these programs; they’re counting on you to protect Medicaid, which they desperately need.”

Sincerely,
YOUR NAME
YOUR CITY, YOUR STATE

Want to learn more about your Members of Congress? Log onto the Presby Legislative Action Center, http://capwiz.com/pcusa/dbq/officials/.

General Assembly
Selections from “On Advocacy on Behalf of the Uninsured,” 214th General Assembly (2002)
of the PC(USA):

• Reaffirms the church’s commitment to advocacy at all levels on behalf of low-income and fixed income immigrant populations who lack health insurance.
• Urges the Rural Ministry Office (Evangelism and Church Development) to give special attention to issues of access to and cost of health care in rural communities, particularly among persons with low incomes and fixed incomes.
• Directs the Presbyterian Washington Office to … urge the expansion of Medicaid to insure more low-income and fixed income persons, including the recently unemployed.
• Urges the Advocacy Committee for Women’s Concerns (ACWC) and the Advocacy Committee for Racial Ethnic Concerns (ACREC) to advocate on behalf of low-income and fixed-income persons who lack health insurance.