Embargoed Until:
February 18, 2009
12:01 a.m. Eastern Time



Christopher Fleming

Sweeping 2005 Medicaid Cuts In Missouri Led To Coverage Losses, Greater Uncompensated Care Burdens On Providers

Missouri's Experience Provides An Important Lesson As States Face New Budget Shortfalls

Bethesda, MD -- After Missouri's sweeping Medicaid cutbacks in 2005, more than 100,000 people lost coverage, and many more faced cuts in benefits and increased cost sharing. The number of uninsured people in the state increased; hospitals faced greater demand for uncompensated care; and community health centers faced revenue shortfalls that forced them to cut staffing, increase patient charges, and seek larger state grants. Moreover, Missouri's cuts slowed the growth in Medicaid spending but did not reduce Medicaid costs.

These findings are contained in a study published today on the Health Affairs Web site written by Urban Institute researchers working with the Kaiser Family Foundation's Commission on Medicaid and the Uninsured. The study examines the consequences of the cuts Missouri adopted in response to the yawning budget shortfalls that Missouri and other states faced in the beginning years of the decade. http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.2.w335

Between 2001 and 2004, Missouri faced $2.4 billion in shortfalls, notes lead author Stephen Zuckerman, a senior fellow at the Urban Institute's Health Policy Center, and coauthors. Other states addressed their budget gaps with temporary revenue increases and relatively small changes to their Medicaid program, but Missouri chose to respond with much larger cutbacks. Some of these cuts were reversed in 2007 legislation known as MO HealthNet, the researchers note, but they say it is too soon to evaluate how well this new program is working.

"At a time when states are experiencing even greater shortfalls, and deteriorating economic conditions make the safety net more important than ever for Americans, Missouri's experience serves as a warning of the potential consequences of large cutbacks in state health funding," Zuckerman said. "It will be important for the federal government to provide sufficient aid to states, through measures such as temporarily increasing the federal matching rate for state Medicaid expenditures, so that states can continue to provide needed health care services to their most vulnerable citizens."

Prior to 2005, parents in Missouri families with incomes up to 75 percent of the federal poverty level, or about $14,500 for a family of four, could qualify for Medicaid coverage. In its cutbacks, Missouri reduced the Medicaid income cap for parents to 17-22 percent of poverty. Medicaid income caps were also reduced for elderly, disabled, and temporarily disabled Missouri residents.

In its State Children's Health Insurance Program (SCHIP), Missouri introduced premiums for families with incomes as low as 150 percent of poverty, down from 225 percent of poverty prior to 2005. Under a new "affordability" test, the state also barred from SCHIP families with incomes above 150 percent of poverty if they had access to employer health coverage costing up to $335 per month, even though for some families that would entail spending 17 percent of their income on health insurance.

In addition, in 2005 Missouri ended a program allowing certain disabled workers to buy into Medicaid, and it made dental, vision, and other services for adult Medicaid enrollees subject to annual budget appropriations. The 2005 legislation also prioritized annual reinvestigations of income for Medicaid and SCHIP enrollees, despite the fact that Missouri did not necessarily have sufficient caseworkers to accomplish these reviews without backlogs that would result in eligible Missourians' losing coverage.

By examining a range of data sources and interviewing a diverse group of stakeholders, Zuckerman and coauthors Dawn Miller and Emily Pape were able to document the consequences of Missouri's 2005 cuts. Among their findings were the following:

-- Combined Medicaid and SCHIP enrollment in Missouri fell by 15.4 percent between 2004 and 2006. Although several interviewees indicated that the state did not expect SCHIP enrollment in Missouri to drop significantly as a result of the new premiums and affordability test, it in fact dropped 30 percent between June 2004 and June 2006, while national SCHIP enrollment increased 3.4 percent over the same period.

-- About 20 percent fewer nonelderly Missourians had Medicaid or SCHIP coverage in 2006 than in 2004. Even after accounting for an increase in nongroup private health insurance, the number of uninsured Missourians went up by 103,500 over this period -- an increase of about 1.7 percentage points. Low-income adults, the group most affected by Missouri's 2005 cutbacks, accounted for more than half of the decline in Medicaid and SCHIP coverage and three-quarters of the increase in the number of uninsured state residents.

-- In 2006, Missouri hospitals reported costs of $591 million for uncompensated care, up from $429 million in 2004. This represents an increase in the uncompensated care burden -- the ratio of uncompensated care expenses to total expenses -- from 3.6 percent in 2004 to 4.2 percent in 2006. However, stakeholders reported that this increase did not result in serious financial pressure on the state's hospitals.

-- Community health centers in Missouri saw a shift in their patients away from those covered by Medicaid and SCHIP and toward those lacking any health coverage. The dropoff was most dramatic for SCHIP enrollees: Over the 2004-2006 period, the number of CHC visits by SCHIP enrollees declined 25 percent, from about 12,000 to about 9,000, while the number of visits by uninsured Missouri residents increased 29 percent.

After the embargo lifts, the article by Zuckerman and coauthors will be available at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.2.w335


Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org. The full text of each Health Affairs Web Exclusive is available free of charge to all Web site visitors for a two-week period following posting, after which it will switch to pay-per-view for nonsubscribers. Web Exclusives are supported in part by a grant from the Commonwealth Fund.


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