States Making Huge Cuts in Health Safety Net Programs Due to the Recession

New Report Provides First National Glimpse at Cuts in State Medicaid and Children’s Health Insurance Programs during Recession

Washington, D.C.—A report released today documents how many states across the country are slashing their health care safety net programs in response to fiscal crises caused by the recession. With at least 43 states facing budget deficits in 2009 or 2010, many states have cut or are planning cuts to Medicaid and the Children’s Health Insurance Program (CHIP), according to the report.

The report, titled “A Painful Recession: States Cut Health Safety Net Programs,” was prepared by the national health consumer organization Families USA. The report indicates that more than one million people are at risk of completely losing health coverage, and many more low-income people and families will see benefits reduced and out-of-pocket costs increased.   

“During economic downturns, the health care safety net is supposed to provide protection for families so they don’t lose needed health coverage,” said Ron Pollack, Executive Director of Families USA. “Unfortunately, for too many people in too many states, the health care safety net is fraying and allowing more and more families to fall through.”

According to the report, states are cutting Medicaid and/or CHIP through one or more of the following four methods: (1) reducing enrollment and eligibility in those programs; (2) cutting program benefits; (3) increasing required out-of-pocket costs for program enrollees; and (4) reducing payments to health care providers who, as a consequence, may refuse to treat Medicaid and CHIP patients. Among the report’s findings are the following:

• Reducing enrollment: Eight states (AZ, CA, FL, GA, NV, RI, SC, and TN) have enacted or are considering cuts that would reduce eligibility or limit enrollment in Medicaid and CHIP. Of the people who have already lost or are at risk of losing their coverage, more than 590,000 are adults and more than 447,000 are children.

• Cutting benefits: Twelve states (CA, FL, GA, MA, ME, MN, NV, NY, RI, SC, TN, and UT) and the District of Columbia have enacted or are considering reductions in benefits covered by Medicaid or CHIP, such as dental care, vision care, hearing services, and home and community-based services for people with disabilities (who may now need to stay in nursing homes instead of moving back into their own homes).

• Increased out-of-pocket costs: Five states (CA, GA, ME, RI, and VT) have enacted or are considering increases in low-income people’s out-of-pocket costs in Medicaid or CHIP, which may make program participation unaffordable.

• Health provider cuts: Thirteen states (CA, FL, GA, IL, MA, MD, ME, MN, NV, NH, NY, SC, and UT) and the District of Columbia have reduced or are considering reductions in payments to health care providers serving Medicaid and CHIP enrollees. Such rate cuts mean that these enrollees will have a harder time finding a health care provider to treat them.

The Families USA report comes one month in advance of an upcoming debate about an economic recovery package being developed by the incoming Obama Administration for the new Congress. It is expected that the proposed package will provide additional matching funds to states for their health care safety-net programs and may include the reauthorization of—and additional funds for—the CHIP program.

Also included in the new report are state-by-state estimates of the economic stimulus (business activity, jobs and wages) generated by temporarily increasing federal Medicaid matching funds—a provision that is likely to be included in the economic recovery legislative package.

“The most important antidote to the growing health care safety net crisis will be increased federal funds along with the reauthorization of CHIP,” said Pollack. “Under current law, the CHIP program will expire at the end of March 2009, and the states need to be assured that the program will continue with increased and reliable federal support.”

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Families USA is the national organization for health care consumers. It is nonprofit and nonpartisan and advocates for high-quality, affordable health care for all Americans.

1201 New York Avenue NW, Suite 1100 · Washington, DC 20005
202-628-3030 · Email: info@familiesusa.org · www.familiesusa.org