Arizona Medicaid Cuts Seen as a Sign of the Times
By KEVIN SACK
Published: December 4, 2010
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With enrollments exploding, revenues shrinking and the low-hanging fruit plucked long ago, virtually every state has had to make painful cuts to its Medicaid program during the economic downturn.
Mounting State Debts Stoke Fears of a Looming Crisis (December 5, 2010)
What distinguishes the reductions recently imposed in Arizona, where coverage was eliminated on Oct. 1 for certain transplants of the heart, liver, lung, pancreas and bone marrow, is the decision to stop paying for treatments urgently needed to ward off death.
The cuts in transplant coverage, which could deny organs to 100 adults currently on the transplant list, are testament to both the severity of fiscal pressures on the states and the particular bloodlessness of budget-cutting in Arizona.
“It’s a real sign of the times,” said Alan Weil, executive director of the National Academy for State Health Policy. “And I think this is a precursor to a much larger number of states having this discussion.”
Policy choices with such life-threatening implications are all the more striking given the partisan framing of the health debate.
Republicans have argued that the new health law will lead to rationing, warning even of “death panels.” Democrats have responded that care is already rationed, with 50 million people going largely without insurance, and that the law will bring greater equity.
The Arizona case, said Diane Rowland, director of the Kaiser Commission on Medicaid and the Uninsured, “is a classic example of making decisions based not on medical need but based on a budget.” And, she added, “it results, potentially, in denial of care to individuals in a life-or-death situation.”
The federal Centers for Medicare and Medicaid Services do not monitor which states use Medicaid money for transplants. But health experts said no other state had withdrawn coverage for patients pursuing transplants.
Arizona’s decision, by Gov. Jan Brewer, a Republican, and the Republican-controlled Legislature, was made after state officials assessed success and survival rates for a number of transplant procedures. National transplant groups call the figures misleading.
“It seems inappropriate that life-saving care has the potential to be withheld based solely on budgetary issues and the bureaucratic determination of relative benefits,” said Dr. Robert S. Gaston, president-elect of the American Society of Transplantation.
There is usually a long-term consequence to short-term cuts in safety-net programs like Medicaid, which insures low-income Americans and is financed by state and federal governments.
When payments to doctors are cut, fewer providers are willing to treat Medicaid patients. When eligibility levels are lowered, more people are left to seek charity care in emergency rooms. When optional benefits like dental services and prescription drugs are eliminated, conditions worsen until they require more expensive care.
But no other state in recent memory has made such a numbers-driven calculation pitting the potential loss of life against modest savings.
Jennifer Carusetta, the legislative liaison for Arizona’s Medicaid agency, said the transplant cuts would save a mere $800,000 in the current fiscal year, and only $1.4 million for a full year.
The cuts were imposed in an effort to close a $2.6 billion shortfall in the state’s $8.9 billion budget for this year.
The options available to states for cutting Medicaid have been limited because the federal stimulus package and the health care law have required them to maintain eligibility levels. That has left states to cut payments to providers and trim benefits not required by federal regulations.
Many states, including Arizona, have done both. A September report by the Kaiser Family Foundation found that 39 states cut provider payments and 20 cut optional benefits in their 2010 fiscal years, with similar numbers planning to do so in 2011.
Arizona reduced Medicaid payments to doctors by 5 percent last year and has frozen payments to hospitals and nursing homes for two years. All providers will undergo another 5 percent cut on April 1, Ms. Carusetta said.
This year, Arizona became the only state to eliminate its Children’s Health Insurance Program, which would have affected 47,000 children of working-class parents. Lawmakers reversed course before the effective date only after concluding that the state might run afoul of federal requirements and lose billions of dollars in matching money.
The state has also enacted a wide range of Medicaid cuts, eliminating coverage for emergency dental procedures, insulin pumps and orthotics. “We realize this has serious impacts on people,” Ms. Carusetta said. “Unfortunately, given the fiscal constraints facing our state, the Legislature has limited options at this point.”