Efforts to Reform Medicaid in a Time of Fiscal Stress

Abstract

With states facing their worst financial crisis since World War II, Medicaid programs across the nation are facing a period of significant stress. Medicaid expenditures are a major part of most states' budgets, which make them an important target when policy makers and legislators are faced with budget deficits. This study compares programs across states and identifies major reform trends being used by state officials as they try to balance the needs of their Medicaid recipients with the realities of budget shortfalls. Our research illustrates that the short-term view prevails: many states have relied heavily on one time funding sources, such as tobacco settlement monies in conjunction with traditional cost controlling mechanisms (e.g., freezing provider reimbursement rates, reducing program eligibility levels, requiring prior authorization for services) as their means of addressing the current crisis.