STATE CHANGES DEFICIT MEDICAID?

Medicaid and Health Care

In addition, state officials also are concerned about health-care costs. The super committee has the ability to cut programs such as Medicare and Medicaid. States have been using federal stimulus money to cover their health-care budget shortfalls, so any Medicaid cutbacks would be particularly problematic, Adkins says. State- and local-government layoffs could boost Medicaid caseloads just as federal stimulus funds dry up and the government cuts back. "It's almost a perfect storm for a fiscal crisis for states," he says.

States are significantly increasing their own Medicaid spending in order to meet federal requirements, according to the National Association of State Budget Officers. Medicaid general-fund spending is projected to increase by $16 billion in the 2012 fiscal year.

Amid the coming cutbacks, states will be hoping for more flexibility in Medicaid rules. "Whether it's pharmacy, provider reimbursement rates, who is eligible and what kind of coverage has to be provided, states will be looking at options to deal with increasing caseloads," Adkins says. "And there are so many unknowns on how new health-care reform will affect those programs."

Tim Keen, director of the Office of Budget and Management in Ohio agrees: "Now that we'll be getting fewer federal dollars, we're hopeful that Washington will provide states with greater flexibility to manage any changes."