Medicaid Cost Containment on State's Agendas Across the U.S.

Press Release With most states coping with their fourth year of fiscal stress, all 50 states and the District of Columbia have planned or implemented Medicaid cost containment actions for fiscal year (FY) 2004.

The third annual survey of the 50 states and the District of Columbia by the Kaiser Commission on Medicaid and the Uninsured (KCMU) reveals that the continuing fiscal crisis in the states is having a far-reaching impact on health coverage for low-income individuals and families at a time when enrollment is increasing due to sluggish economic conditions. After three years of efforts to curb Medicaid spending growth, states report the average spending growth for Medicaid in 2003 was 9.3 percent, down from 12.8 percent in 2002. This marks the first time since 1996 that the growth rate has declined.

"The duration of the state fiscal crisis is impacting Medicaid coverage broadly and deeply. With 34 states reducing eligibility and even more restricting health care benefits over the last three years, the state fiscal crisis is putting health care for low-income families and the elderly and disabled at risk. Many will get less care and others will lose it altogether," said Diane Rowland, executive director of KCMU.

The Commission released two additional new reports on the states’ fiscal situation and on the factors contributing to Medicaid spending growth. The first study documents that the primary cause of the state fiscal crisis has been the sudden falloff in state tax revenue and Medicaid’s growth has played a much smaller role. The study concluded that states are likely to face continued fiscal difficulties for the next several years. The second study indicates that health care spending for individuals with disabilities and the elderly accounted for nearly 60 percent of Medicaid spending growth from FY2000-02.

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