States Cut Medicaid As Federal Stimulus Dollars Dry Up

With federal money drying up for Medicaid, states are shouldering a greater cost burden and making significant cuts to balance their budgets — just as the economic downturn is expanding the pool of eligible applicants. Since federal stimulus money ran out in June, states have spent 28.7 percent more this year on their Medicaid programs and have turned to cost-cutting strategies as a result. A study from the Kaiser Family Foundation released yesterday provides a breakdown for how many states are cutting services and benefits to contain costs:

46 states Introduce new provider rate restrictions, up from 39 states in 2011.

48 states Add provider taxes to hospitals and nursing facilities to compensate for the provider rate cuts.

18 states Cut benefits for consumers.


13 states Expand benefits, the same number as this year.

3 states Cut eligibility, up from two in 2011.

14 statesIncrease copays, up from five states in 2011.

33 states Expand long-term care, compared to 32 last year.

13 states Expand benefits, the same as this year.

15 states Expand eligibility, compared to 28 in 2011.

Meanwhile, state economies also feel the impact of the cuts. A June report from Families USA shows that a 5 percent cut in federal Medicaid cut means a $3.8 billion loss to New York’s economy and almost 30,000 jobs lost.