Managed Care - March 2009 - (Page 6) LEGISLATION & REGULATION Stimulus Saves Medicaid, But Nobody’s Celebrating Managed care companies may benefit from swelling enrollment, but some questions remain unanswered By John Carroll B y all accounts, when Congress put $87 billion in new federal Medicaid subsidies in the stimulus bill, it prevented some bone-deep budget-cutting in states that have watched tax revenue plunge with growing alarm. Under the law, states that agree to take the money will be prevented from changing eligibility rules or finding some way to make it more difficult for people to sign up. With soaring unemployment, analysts expect new beneficiaries to take full advantage of the protection, crowding into the Medicaid program in growing numbers. Medicaid managed care companies may even stand to benefit from the swelling enrollment as some protections already provided for plans guard the rates they are paid. But while the federal government’s expanded subsidy will make Medicaid budgeting easier — at least in the near term — some states are still expected to hunt for new ways to cut benefits and provider rates. “We think it’s a very, very good bill for Medicaid programs,” says Ann Kohler, president of the National Association of State Medicaid Directors. It is not, she is quick to add, a panacea. “I think there may still be cuts because the budget deficits are so deep.” That prospect rang the bell on round two in the fight over the future of Medicaid — even before President Obama signed the bill into law. Big, big, big “These federal health care dollars must be used to restore the draconian and disproportionate health care cuts and taxes [that Gov. David Patterson] has proposed,” declared Daniel Sisto, president of the Health- care Association of New York State, as the full impact of the subsidy came into focus in mid-January. Sisto and other advocates say that once you analyze these new federal numbers, there is no valid excuse for pursuing cuts to the Medicaid program. The federal government’s Medicaid subsidy is based on the Federal Medical Assistance Percentage formula, which uses a sliding scale to allocate a larger share of the federal cost to lower-income states. Under this approach, a high-income state like New York has been getting 50 percent of its Medicaid money from the feds while a low-income state like Kentucky has received 70 percent. Under the stimulus bill, each state will see a minimum uniform increase in its federal subsidy of 6.2 percentage points, so New York’s 50 percent subsidy grows to 56.2 percent. “One thing is certain: Without the enhanced federal matching funds, states would be looking at very large and significant cuts,” says Vernon Smith, PhD, the former Michigan Medicaid director and a principal at the research and consulting company Health Management Associates. The current downturn may be worse than the last recession, says Smith, but the new federal subsidies are also a lot better. Then, the federal government provided a 2.95 percentage point boost to cash-strapped states. States that have high unemployment rates qualify for even more in the stimulus package. “This is a big, big, big issue here” in Michigan, says Smith, who goes on to illustrate just how big it is. California, a state with a painfully high unemployment rate, will get the flat added 6.2 percentage point match along with a 5.4- 6 MANAGED CARE / MARCH 2009
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