States cut Medicaid payments amid budget shortfalls
North Carolina and Idaho have implemented reductions in Medicaid provider payments to address state budget gaps, even before anticipated federal cuts under a new tax-and-budget law. These moves are sparking concerns over reduced access to care and potential hospital closures. Families relying on the program, like one in North Carolina, face immediate challenges in securing essential services.
North Carolina's Medicaid agency enacted cuts effective October 1, imposing a minimum 3% reduction in payments to all providers treating Medicaid patients. Primary care doctors will see an 8% drop, while specialty doctors face a 10% cut, according to the North Carolina Department of Health and Human Services.
Alessandra Fabrello, who has provided round-the-clock care for her son Ysadore Maklakoff since he suffered acute necrotizing encephalopathy as a 9-month-old in 2011, highlighted the personal toll. Maklakoff qualifies for 112 hours of skilled nursing weekly through North Carolina's Medicaid but receives only about 50 hours in a good week. "When you say, 'We're just cutting provider rates,' you're actually cutting access for him for all his needs," Fabrello said. Her son's dentist has already informed her that the office will stop accepting Medicaid patients in November, exacerbating shortages in occupational therapy, speech therapy, nursing, and respite care.
Former North Carolina Medicaid chief medical officer Shannon Dowler warned that these reductions, unrelated to the federal law slashing $1 trillion from Medicaid over the next decade, will shrink the provider network, leading to "an immediate loss of access to care, worse outcomes, and cause higher downstream costs." North Carolina, with over 3 million Medicaid enrollees, received $319 million less than requested in a mini-budget passed in July after legislative deadlock. The state is projected to lose $23 billion in federal Medicaid funds over the next decade.
In Idaho, facing an $80 million shortfall, officials cut Medicaid payments by 4% across the board this month, affecting its 350,000 enrollees. Nursing home operators, reliant on Medicaid for 75% to 100% of funding, fear staff reductions or fewer residents. The Idaho Hospital Association notes severe strain on about two dozen small rural hospitals with 25 or fewer beds, some operating with less than two days of cash on hand. "Hopefully, none of them will close," said chief advocacy officer Toni Lawson, though labor and delivery units may be first to shutter.
Nationwide, Medicaid accounts for 19% of state general fund spending on average, second only to K-12 education. States like Michigan, Pennsylvania, and Washington are also debating or implementing program adjustments amid slowing revenue growth and rising costs.