States are already cutting Medicaid provider payments. Here's the impact
AYESHA RASCOE, HOST:
We're in a federal government shutdown over affordable care tax credits. Meanwhile, state governments are starting to make cuts to their Medicaid programs. That's the public health insurance covering more than 70 million Americans. Those cuts are likely to continue regardless of how the shutdown ends. Here to tell us more is Bram Sable-Smith. He's a reporter with our partner KFF Health News. Bram, thanks for joining us.
BRAM SABLE-SMITH: Happy to be here.
RASCOE: For those who might not be familiar with the benefit, can you briefly tell us what Medicaid usually pays for?
SABLE-SMITH: So Medicaid is a joint program between the feds and the states. We usually think of it as covering adults and kids with lower incomes, but it also pays for longer-term services, like in-home care for people with disabilities and also nursing home care. Three in 5 nursing home residents in the U.S. rely on Medicaid. So it's a large program. It typically makes up around 19% of the spending from any given state's general fund. And many states are facing budget shortfalls, and they're looking to slash their Medicaid programs to make do.
RASCOE: These programs are pretty tightly funded to start with, right? So, I mean, what is there to slash?
SABLE-SMITH: Right. Well, so far this year, two states have forced every medical provider that accepts Medicaid to take a pay cut. So Idaho announced a 4% across-the-board pay cut in September. And most recently, North Carolina on Wednesday cut pay by at least 3%. Primary care got an 8% cut, and specialty care saw a 10% cut.
RASCOE: That sounds like a lot. I mean, what effect do those pay cuts have on people's access to health care?
SABLE-SMITH: Well, when you cut payments to doctors and to nurses and to physical therapists, they become less likely to accept patients that have Medicaid coverage.
RASCOE: OK. So that's - is that already happening in states that cut payments?
SABLE-SMITH: Yes, it is. I spoke recently to Alessandra Fabrello. She lives in Chapel Hill, North Carolina, and she's a medical caregiver for her son, Ysadore, who's now 18. He experienced a rare brain condition as a baby that kills brain tissue, and he's needed round-the-clock care ever since.
ALESSANDRA FABRELLO: He struggles to survive every single day. It is almost impossible to explain what it takes to keep a child alive who should be dead.
SABLE-SMITH: Medicaid is supposed to pay for him to get that care at home. Otherwise, he'd have to live in a hospital. But even before this rate cut, Alessandra said it's been extremely difficult finding in-home medical providers who take Medicaid. Take physical therapy, for example.
FABRELLO: He doesn't receive any therapy. He qualifies for therapy, but he doesn't receive any in-home therapy because we cannot find providers because of the reimbursement rate as it is.
SABLE-SMITH: Medicaid already paid way less than private insurance, so not many providers take it. And now with these new cuts, even more providers are dropping out. And for the past year, North Carolina's Medicaid program paid Alessandra herself to take care of Ysadore. It's her main source of income, and now she's facing a pay cut, too.
RASCOE: Are we going to see cuts like this in other states across the country?
SABLE-SMITH: Well, we don't know yet what other states plan to do, but these cuts in North Carolina and in Idaho really could be an indication of things to come elsewhere. There's sort of a perfect storm brewing right now. State budgets are getting squeezed. Medicaid costs are going up. Some states are cutting taxes. Federal COVID relief dollars that states were using to patch budget holes in the past fully dried up this year. And of course, President Trump's signature budget legislation is going to cut federal spending on Medicaid by almost $1 trillion over the next decade. States will have to make that up or cut services. These provider pay cuts are an example of how states will begin to manage those shortfalls.
RASCOE: Well, we will continue monitoring the situation, as I'm sure you will, too.
That's Bram Sable-Smith. He's a reporter with our partner KFF Health News. Thanks so much for your reporting.
SABLE-SMITH: Thanks for having me.
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