Medicaid cutbacks painful as US states push reforms

It was a Monday in late July and Mary Foster was almost out of medicine.

Because of new state Medicaid cutbacks that took effect on July 1, the 62-year-old Missouri woman wasn't sure how she would get the $600 worth of prescription pills and insulin she takes monthly to combat Diabetes and High Blood Pressure.

Foster stopped work a few years ago to adopt her drug-addicted son's two toddlers and the three of them now live on about $1,100 a month with no private insurance.

So as the two children played at her feet, Foster called social workers and hospitals, searching for low-cost access to the medicine she needs. Someone suggested she ask a pharmaceutical company for free samples. That might get her through another month, she was told.

"I've got these children to raise and I don't know what I'm going to do," Foster said, starting to cry. "There isn't much anywhere to turn to."

Welcome to the world of Medicaid reform.

Faced with rising health care costs, greater numbers of poor, elderly and uninsured people, and a reluctance to raise taxes, state governments around the nation are working to cut billions of dollars from their Medicaid budgets.

From California to Florida, state leaders say reining in Medicaid, a 40-year-old joint federal and state program that serves millions of poor Americans, including children and the disabled, is imperative if states are going to meet education, infrastructure and other needs.

Many states are seeing Medicaid costs grow more than 10 percent a year, according to the National Governors Association chairman Mike Huckabee, who is also governor of Arkansas. In his state, the Medicaid budget ballooned to $3.5 billion from $600 million over the last nine years.

"Medicaid is growing at an unsustainable rate. It's a train wreck waiting to happen," Huckabee said.

But as states make the cuts, the actions are roiling communities nationwide and spurring a debate over how high the cost of compassion should go.

"We are talking about the most vulnerable people in the nation and a declining willingness... to provide basic support for those populations," said Henry Aaron, of the Brookings Institute, a public policy thinktank.

"People are going to undergo financial hardships," he said. "Some will be in pain. Some will die."

NO COVERAGE FOR CRUTCHES

The Bush administration is a key proponent of a scaled-down Medicaid system and has set up a 28-member panel to find ways to trim the program by $10 billion over the next five years. The panel's first meeting was on July 27. Their first report is due Sept. 1.

Also this summer, the National Governors Association asked Congress to give states greater flexibility to manage Medicaid costs through cost-sharing and other arrangements aimed at discouraging misuse of the system, and hopefully avoiding big cuts in services.