Health care for low-income and disabled people is being slashed as states face their third consecutive year of fiscal crisis. In 2003, almost every state legislature cut benefits, eligibility, or payments to health care providers, according to the National Conference of State Legislatures. In March of 2003, the Center on Budget and Policy Priorities estimated that based on proposed or recently enacted legislation, 1.7 million people would lose coverage, and many others will lose various health benefits such as prescription drugs, dental, vision, and home health care even though they remain insured.

Health care for low-income and disabled people is being slashed as states face their third consecutive year of fiscal crisis. In 2003, almost every state legislature cut benefits, eligibility, or payments to health care providers, according to the National Conference of State Legislatures. In March of 2003, the Center on Budget and Policy Priorities estimated that based on proposed or recently enacted legislation, 1.7 million people would lose coverage, and many others will lose various health benefits such as prescription drugs, dental, vision, and home health care even though they remain insured.

For example,

• In Oklahoma, Medicaid coverage was terminated for 8,300 seniors and people with disabilities.
• In Colorado, 3,500 legal immigrants, including children, seniors and people with disabilities will no longer be covered by Medicaid.
• In Tennessee, the state’s Medicaid program, TennCare, ended stopped coverage for nearly 200,000 people.
• In Texas, the House of Representatives has passed a bill that would set stricter eligibility criteria for Medicaid and the Children's Health Insurance Program. As a result, state officials said, 240,000 children and 17,000 pregnant women would lose coverage.

Medicaid is the states’ primary health care safety net to eligible persons, including children, pregnant women, low-income adults in families with dependent children, and individuals with disabilities. The program currently serves 51 million people. Of all Medicaid beneficiaries, approximately one quarter are elderly and disabled and three-quarters are children and non-disabled adults, while the costs of Medicaid services are approximately three-quarters for the elderly and the disabled and one-quarter for children and non-disabled adults.

Cutting Medicaid spending is particularly painful for states because the program is financed jointly by state and federal governments. That means states forgo federal money with every Medicaid dollar they cut from state budgets. Medicaid is the second largest program in most states’ budgets after elementary and secondary education. Medicaid now accounts for 20 percent of state spending, whereas in 1992 it accounted for 17.8 percent. Medicaid cost increases stem primarily from increased costs for pharmaceuticals as well as enrollment increases, according to the Kaiser Commission on Medicaid and the Uninsured report.

States also face serious reductions in business activity and job loss as they cut Medicaid funding.

Many state officials are pleading for federal help as they face an array of painful trade-offs, often pitting the needs of impoverished elderly people for prescription drugs and long-term care against those of low-income families seeking basic health coverage.

Current legislation appears to ease state Medicaid costs, however the offer comes with a major catch, according to a study by the Center on Budget and Policy Priorities. The Jobs and Growth Tax Relief Reconciliation Act of 2003 (TRRA) provides temporary increases to eligible states in the Federal Medical Assistance Percentage (FMAP), the federal matching rate for states’ medical assistance expenditures under their Medicaid program. The catch is that states that opt for this increase would receive lower federal Medicaid payments than they would otherwise receive, beginning in 2011. They also run the risk that capped federal payments will not keep pace with the increase in costs.

Medicaid is only part of a myriad of health care structures that needs to be addressed so that the most vulnerable populations, including children and the elderly, can be assured access to quality healthcare.