Recession pushes many into Medicaid: Kaiser

WASHINGTON (Reuters) - Enrollment in Medicaid, the healthcare program for the poor, showed the sharpest annual rise last year since the late 1960s, a report said on Thursday, blaming the effects of the recession.

The Kaiser Family Foundation said 3.69 million were enrolled in Medicaid in 2009, bringing the U.S. total to more than 48 million.

The surge in enrollment added stress to the weakened finances of states, which administer the program with reimbursements from the federal government.

“As a result of the recession, Medicaid spending and enrollment growth significantly exceeded projections and continued to accelerate in fiscal 2010,” the foundation said in a special report.

For most states, fiscal 2010 ended in June.

Total Medicaid spending growth across all states, which administer the program with reimbursements from the federal government, was the highest rate in eight years in fiscal 2010. It averaged 8.8 percent, well above original projections of 6.3 percent growth during fiscal 2010, Kaiser said.

Enrollment growth in the program averaged 8.5 percent in fiscal 2010, according to Kaiser, which said that exceeded the 6.6 percent growth projections at the beginning of the year.

The $814 billion federal economic stimulus plan passed last year provided extra funding for states for Medicaid, in the hope of covering the costs of the increased number of enrollees and of freeing up state budgets for spending in other areas.

The plan helped states drop their spending on Medicaid, which can take up a third of their budgets, by 7.1 percent in fiscal 2010 and by 10.9 percent in fiscal 2009, Kaiser found.

But even with the U.S. government shouldering a greater share of the burden, states were forced to make cuts.

In fiscal 2010 48 of the 50 states made cuts to some part of their Medicaid programs, according to the report. In fiscal 2011, 46 states intend to cut back on Medicaid spending.

Altogether, 20 states restricted the types of benefits enrollees could use in fiscal 2010, the largest number since records began in 2001 and double the number from the year before. States typically limited adult dental services, or medical supplies or personal care services, Kaiser said.

The extra help provided by the stimulus plan, $87 billion, expires in December. Congress last month passed an additional $16 billion in Medicaid funding that states can use through June.

But many states were counting on more help and will have to go back to their fiscal 2011 budgets and try to find new areas to slash spending, Kaiser found. In fiscal 2010, most states experienced an unprecedented decline in tax revenue and because all states, except Vermont, must balance their budgets, many have already cut their spending considerably.

This is all setting the stage for a grim fiscal 2012, Kaiser said. In that year, the extra Medicaid money will be completely gone but “state revenues are almost certain to remain below pre-recession levels.”

The one bright point comes from additional federal spending through the healthcare reforms Congress passed this year.

The reforms pushed by President Barack Obama made more people eligible for Medicaid, taking them off the rolls of local healthcare programs for those with low incomes. Meanwhile, the federal government will entirely cover the costs of the new enrollees for the first few years so that the states do not have to spend more.

Reporting by Lisa Lambert; Editing by Kenneth Barry