Study: Medicaid is mounting strain on state budgets

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The increased federal match is expiring while enrollment continues to grow. Because Medicaid primarily serves low-income people, more people are eligible for the program during times of high unemployment. But high unemployment also strains the tax revenues that pay for Medicaid.

“Enrollment growth is directly related to changes in the economy,” Smith said.

States have responded to the mounting fiscal pressures with a variety of Medicaid cuts. The most common tool is direct cuts in doctors’ payments — 39 states cut providers’ rates this year and 46 plan to next year, the Kaiser report says. States are also dropping or restricting certain benefits and requiring patients to pay more out-of-pocket.

The healthcare reform law significantly expands Medicaid, beginning in 2014, and it prevents states from cutting eligibility standards in the interim. The federal government will temporarily cover the full cost of the new enrollees.