In the last six months more than half the states have moved to cut back their Medicaid programs for the poor, mainly for reasons of rising costs.
These cuts were without regard to the further reductions President Reagan has proposed, and Congress seems about to adopt, in Medicaid, which is the government's second-largest health program (after Medicare for the elderly), and, at more than $16 billion this fiscal year, far and away its largest welfare outlay.
The cuts the states have had to make already are one of the reasons they have fought so hard against the further reductions Reagan wants.
The federal government, on average, pays about three-fifths of Medicaid costs. Reagan originally proposed a cap under which the federal contribution would rise only 5 percent next year. In a concession to northeastern and midwestern Republicans, in whose states Medicaid is particularly important and costly, his operatives this week gave ground and agreed to an increase of 7.5 percent.
But even this will fall short of the expected inflation rate in the health care sector; further program cuts will thus be required. This, in turn, could significantly affect the access poor people have to health care. Even now, Medicaid covers only just over half the people under the poverty line.
A just-completed survey of cutbacks, conducted by the Intergovernmental Health Policy Project under a contract from the Health and Human Services Department, shows that since the start of 1981:
More than half the states have proposed some degree of benefit reduction, ranging from limits on the number of hospital days to the elimination of some or all optional services.
Twenty-one states have proposed increasing or adding patient payment requirements for some optional medical services under Medicaid, although the program is designed to benefit only the poorest people in the country.
Nearly half the states are considering cuts or freezes in payments to hospitals, doctors and other medical professionals providing services to medical clients.
At least 14 states "are proposing significant changes in their eligibility standards," including eliminating whole categories of people at the edge of the poverty line even when their medical bills are huge.
Although the survey only goes back to the start of this year, the trend toward retrenchment actually began in earnest last year.
Even before the current rounnd of state efforts to cut back the program started, Medicaid did not provide the coverage for the poor that many contemplated when Medicare and Medicaid were enacted in 1965 as perhaps the largest programs of the Great Society.
Medicare, which was tied to Social Security, was to provide basic health care for the aged, financed mostly by the Social Security tax.
Medicaid, it was thought, would take care of others too poor to pay their own bills, by means of a federal-state matching grant program targeted chiefly at people below the poverty line. The states were given wide discretion to make eligibility and service decisions, and the federal government promised to reimburse the states for between 50 percent and 83 percent of their costs, with poorer states getting the higher percentages.
Over the years the Medicaid program has grown enormously; every state except Arizona has joined it. It serves some 21 million people, roughly a tenth of the population.
Rising costs have led the states and Reagan administration to seek ways to pare the program down. But HHS experts estimate that currently only about 54 percent of the people below the poverty line are enrolled in the program; somewhere between 15 million and 20 million are not.
In part this is because people who are under 65 but able-bodies and childless are not eligible, even if poor and ill. In part it is because the states set income eligibilty standards lower than the poverty line.
But even the 54 percent figure doesn't reveal the lack of coverage in many areas. Many states spend most of their money on nursing homes and other institutions for the aged and retarded. Nationwide, about 42 percent of all Medicaid outlays goes for such institutions. This leaves relatively less to take care of low-income children and their mothers, and such states often have just a bare-bones program for them.
Moreover, most of the Medicaid money is spent in a handful of big states with liberal traditions, such as New York and California, which have comprehensive programs with full coverage.
New York and California accounted for about one-third of all Medicaid outlays nationwide in 1979. If Pennsylvania, Michigan, Illinois and Massachusetts are added, the six states combined spent more than 51 percent of the nearly $21 billion in total federal-state benefit outlays in 1979.
Based on preliminary statistics for 1979, virtually all poor people in states like Massachusetts, New York and California were enrolled in the program, but in many states the enrollment ratio is only one in four residents with income under the poverty line (currently $8,400 a year for a family of four). Overall, in 24 states, the ratio of enrollees to persons in poverty was under 40 percent.
Despite the limitations and gaps in the existing program, the survey by the Intergovernmental Health Policy Project shows that the states are desperately scrambling for ways to save money.
Alabama, for example, is raising the percentage of what the patient must pay for prescription drugs, considering imposing partial payments for a variety of services and requiring families of nursing home patients to help support them.
Arkansas and Georgia are considering cutting down on hospital days; Arkansas is considering limits on doctor visits and prescriptions as well.
California is looking at a variety of new limitations. Only a handful of states are considering any improvements in coverage.