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States in Crisis:
The Grassroots Response

State Trends
February. 4, 2002
Medicaid and Budget

Many states are actively seeking to reduce the size of their Medicaid benefit package. They have or are in the process of pursuing HIFA and/or 1115 waivers to restructure both how and who is covered by their Medicaid programs. Deep supplemental waivers, enhanced copays and additional hospital, provider and clinic reimbursement cuts are being pursued. I anticipate that additional pressure will be placed on managed care companies to drive down the costs of service. Medically Needy programs within Medicaid are being reshaped to save money and/or to free up monies to chase other underserved populations (working poor and children).

Many governors have proposed targeted and/or across the board cuts to existing mental health services. Some of these proposed cuts are early session trial balloons. Those groups who organize, build coalitions and make the most noise in the media and to key politicians are finding that many of the direct cutbacks will be reduced or rolled back completely. OK, CT, MA, VT, and OH are recent examples of this trend.

The Medicaid program, though, continues to be at a crossroads. It is being reshaped in many states. Some of this change is will be legislative, but much will be played out of the spotlight using CMS waivers and the regulatory process. This factor linked with the short legislative sessions and that 2002 is an election year makes this a dangerous time. This economic crisis along with the 2002 election gives our affiliates a tremendous opportunity to educate policy makers as to the state of their mental health system of care for adults, children and adolescents and the role Medicaid plays in underwriting the system.

NCSL in its recently published, State Health Care Priorities 2002 conducted a survey in all 50 states of political leaders. The survey indicated that Medicaid budget shortfalls and developing strategies to deal with them and the closely linked prescription drug issues were at the top of virtually every state's priority list for 2002. Our state and local affiliates in every region of the country are under significant pressure from a number of sources to participate actively in the prescription drug and Medicaid battles. Purchasing pools, fail first policies, deep supplemental rebates, generic first plans, and more intensive care management are among the alternatives being considered by state governments.

Parity for Health Insurance

In 2002 coalitions in New Hampshire and Wisconsin have driven broad parity bills that have passed one body of their legislature. I suspect that both bills will be amended downward, if they are to pass their respective Senates. As in 2001, parity for in health insurance remains one of the top three behavioral health issues being debated in state legislatures. The January NCSL study of leadership in state government indicated that 23 states had interest in 2002 in amending current parity laws or enacting a new law.


NCSL's leadership study also indicated the 28 states have given priority to enhancing mental health. services to children and adolescents. A significant number of Commissions were created by legislatures in 2001 to study system reorganization issues. Children, schools and medications expect to remain as a hot topic. Connecticut's innovative KidCare program survived a legislative special session and receives $23 million resources over the next two years. KidCare reorganizes the child serving system to bring appropriate services in a timely fashion to children and their families.

In Session:
All state legislatures are in session in 2002 with the following exceptions:

Not Holding a 2002 Session:
Arkansas, Montana, Nevada, North Dakota and Texas

Not Currently in Session (as of 2/1/2002):
Connecticut, Louisiana, North Carolina, Oklahoma and Wyoming

Mike Fitzpatrick

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