BOSTON Skyrocketing Medicaid costs and resulting budgetary constraints have placed many states' credit ratings in jeopardy, according to a recent repor! by Standard & Poor's Corp. in this week's edition of CreditWeek Municipal.
So far, no state rating has been lowered solely because of Medicaid, but without aggressive measures to control Medicaid costs, states can expect to see rating downgrades, the report said.
"The whole medical issue has had a negative effect on most states' credits." said Elie Radinsky, an associate director at Standard & Poor's. "States have had little or no control over Medicaid costs."
The report comes at a turbulent time for the health care industry. Reform measures appear stalled at the national level. and the states and health care providers are unsure as to what the industry will look like in the future.
Standard & Poor's said that Medicaid expenses are one of the fastest growing components of state budgets. In 1987, Medicaid reimbursements represented 10% of state spending. In 1993, the figure rose to 18%.
Over the past five years, all states have enacted some set of provisions to deal with health care costs, the report said, but only nine states have enacted comprehensive plans.
Florida, Hawaii, Kentucky, Maryland, Massachusetts, Minnesota, Oregon, Vermont, and Washington have been ahead of other states in getting their houses in order, Radinsky said.
"Most states are attempting to broaden the access to better health care services through overall health care reform or insurance reform," said Kenneth Rogers, a director at Standard & Poor's.
By using selective contracting, managed-care programs, capitation contracting, and state purchasing consortiums, states have begun to improve their systems for providing care for the poor. the report said.
Hawaii -- widely considered to be the best state for health care -- has enacted a program entitled Quest that is designed to encourage managed-care providers to lower costs for the state's 70,000 Medicaid recipients through a system of prepaid benefits.
Tennessee's Medicaid spending has risen from less than $1 billion in 1987 to almost $3 billion last year. In order to stave off further increases, the state has established TennCare.
TennCare preapproved 12 managedcare providers in the state that Medicaid patents can see. Patients pay pan of providers' fees according to a sliding scale based on the patient's income, and the state negotiates a fixed rate for the rest.
"It's really too soon to tell which plan is going to work the best." Radinsky said. "The states, though, are trying to implement programs to mirror the changes in the private sector."
Uncertainty in Congress and the White House surrounding health care reform legislation has forced the states into second-guessing in their efforts to make their programs look like what is expected from the federal government, Rogers said.
"Why enact a program of Medicaid reforms that could be overturned in a year?" Radinsky said. "The states upfront costs may be higher because of these changes, but in the long term. they will be beneficial."
The report also noted that while hospitals and other health care providers have not been downgraded solely because of higher Medicaid costs, such costs did play a pan.in some facilities' overall financial problems.
