Note to states: Don’t take out your problems on Medicaid

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As if it comes as a surprise, things are not looking too good for state Medicaid programs. The July through September statistics from the Center on Budget and Policy Priorities tell the story.

After adjustment for inflation, total revenue collections were below 2007 levels in 14 of the 15 states that published complete data. Of the 15 states surveyed, the median experienced a 5.9% decline in total tax revenue after adjustment for inflation.

Particularly alarming is the center’s statement: “Although state revenue collections have been slowing for at least a year, the new figures are the first to show steep declines in revenue across a variety of types of taxes across a range of states from all regions of the country.” (To see the report, click here.)

The center attributes declining revenues to a weak economy.

Publication of such information is the equivalent of sounding a siren for long-term care facilities, which depend on state Medicaid funding to stay in business. Unfortunately, this program is usually one of the first on the chopping block when legislators look to curb spending.

This is a mistake. And experts agree.

Slashing reimbursements to Medicaid providers or reducing grants to not-for-profit social-service providers "are all things that take dollars out of families' pockets, and that's money they can't spend in their local economies," according to Nicholas Johnson, a co-author of the report, in The Wall Street Journal.

Using Medicaid as a punching bag for budgetary shortfalls is not going to solve states’ problems—and there are plenty of examples to show this.

Here’s one: In September, Ohio Gov. Ted Strickland (D) ordered a $198 million cut in state spending. While it was intended to save money it actually may cost taxpayers more for long-term care, according to The Columbus Dispatch newspaper.

The 4.75% across-the-board budget reduction meant that Ohio's Medicaid-funded assisted-living program had to accept fewer applicants. As a result, there has been a waiting list for these facilities. (The state pays for long-term care in nursing homes, assisted living facilities and at home.)

So what's happened? Many hoping to move into assisted living are in more expensive nursing homes. While the assisted-living program pays a fixed rate of $2,100 a month for care, the average monthly payout for nursing-home care is $5,000. Ouch.

It is just one example of a spending cut gone awry, but it speaks volumes: While Medicaid seems like the easy answer to overspending, it isn’t necessarily so.

When looking to slash costs, states should find other programs to trim—programs that don’t provide needed care for the frail, elderly, disabled, and other vulnerable populations.

Or they should find other creative solutions to budgetary shortfalls. Just don’t beat up on Medicaid.

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Daily Editors' Notes

McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Marty Stempniak.