published Thursday, February 10th, 2011

Cleaveland: Economy unravels Medicaid

By Clif Cleaveland

Medicaid, the federal-state program that provides health care for poor Americans, is unraveling. A sluggish economy combined with rising numbers of poor citizens is placing unprecedented strains on the program. Congress and state legislatures are faced with complex economic, political and moral challenges in addressing this troubled, yet vital, program.

Enacted by Congress in 1965, Medicaid generated less debate and controversy than Medicare, which preceded it. Medicaid guaranteed basic outpatient and inpatient medical care but left the specifics to individual states. A state can establish requirements for eligibility and the range of services that are covered.

Eligibility for adults ranges from a low of 17 percent of the federal poverty level (Arkansas) to 150 percent (New York). Children from poor families are covered by a separate State Children's Health Insurance Program (SCHIPS). Tennessee sets Medicaid eligibility for working adults at 129 percent of federal poverty level and SCHIPS eligibility at 250 percent. The federal poverty level for 2010 for a family of four was $20,050.

Some states offer comprehensive Medicaid services. Others offer minimal care.

In 2008, Medicaid spending reached almost $340 billion as it provided varying levels of health care to more than 60 million Americans. Medicaid paid for a third of all births, half of all treatment for HIV-AIDS, and almost 70 percent of patients in long-term care facilities.

The Federal contribution to a state's Medicaid program is based upon that state's per capita income. Nationally, the federal government contributes 56 percent of funding. Among poorer Southern states the federal contributions range from 81 percent for Kentucky to 75 percent for Tennessee and Georgia.

Medicaid, at 8 percent of the U.S. budget, is the third largest domestic program, ranking behind Social Security (20 percent) and Medicare (15 percent).

As states face budgetary crunches several have recently slashed Medicaid benefits. Arizona has dropped coverage for organ transplants and seeks a waiver to drop 200,000 adults from its Medicaid program. Georgia recently ended coverage for dental, eye and foot care. Other states have imposed yearly limits on the number of physician visits and prescriptions. States that choose to reduce payment to providers will drive away providers.

The Affordable Care Act (ACA) which Congress passed and the President signed into law in 2010 standardizes eligibility for Medicaid beginning in 2014. States will continue to receive their current matching grants for Medicaid recipients but eligibility will be increased to 130 percent of the federal poverty level.

The government will finance 95 percent of new Medicaid coverage from 2014 to 2019. A number of states oppose implementing the Affordable Care Act because of fear of additional financial obligations.

Our elected representatives at all levels of government and, indeed, all of us, need to consider these questions:

1.) Is health care a right or a privilege?

2.) If it is a basic right, who should assure this right for economically disadvantaged people?

3.) Should poor people receive the same health care benefits as citizens with private health insurance?

4.) Does the concept of "states rights" mean that an individual state may severely limit the health care available to its poor citizens?

Congressmen and state legislators must deal with reduced revenues and budgetary deficits that in the case of some states are staggering. Rather than simply slash programs haphazardly, our representatives owe us careful, fact-based analysis of options, followed by mature debate. Fiery rhetoric does not solve anything. Deep cuts in health care spending for poor people translates into death for some and misery for many more.

British scientist Richard Doll reminds us that "statistics are people with the tears wiped away."

The Kaiser Family Foundation website ( provides detailed information on all aspects of state and Federal health care programs. "The Politics of Medicaid" by Laura Olson (Columbia University Press, 2010) is another valuable source.

Contact Clif Cleaveland at

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