States hear of leeway to cut Medicaid rolls

WASHINGTON — States with budget deficits can drop Medicaid recipients before commitments to cover more people under the health program expire, an Obama administration official said.

Those states can remove from Medicaid residents who make more than 133 percent of the federal poverty level, or $14,520 in 2011, according to the letter sent Friday by Cindy Mann, director of the U.S. Center for Medicaid. The change started Friday and carries through the end of 2013.

States that certify that they will have a deficit don’t have to use the health program for the poor to cover such optional populations, Mann said in her letter. Children, parents, the disabled and pregnant women are protected, according to Mann.

Forty-five states and the District of Columbia are projecting budget deficits for the fiscal year that starts July 1 for most, according to the Washington-based Center for Budget and Policy Priorities.

The law’s clarification may help governors reduce budget deficits as they focus on cutting state workers’ retirement costs. Health and Human Services Secretary Kathleen Sebelius, a former governor of Kansas, is sympathetic to the problems states face, she said in a Feb. 16 interview in her office. “What we’re trying to do is look at ways that we, at the federal level, can be helpful,” she said.

Wisconsin, which covers childless adults who earn as much as 200 percent of the federal poverty level, may drop some of those people to balance the state’s budget under the guidance laid out in the letter. Arizona, which already caps eligibility for childless adults at 100 percent of the poverty level and has sought to trim its rolls, won’t be affected.

The state flexibility was created by the 2010 health overhaul, which President Barack Obama signed in March. The U.S. has emphasized that the flexibility for states isn’t a change in policy, just a clarification of existing law.

The U.S. Centers for Medicare and Medicaid Services hasn’t reviewed any applications by states to cut their Medicaid rolls under the rules, Peter Ashkenaz, a spokesman for the department, said in an e-mail.