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"Here is one of those stories you have to read about healthcare"

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Doctors at the Maple City Health Care Center, a neighborhood clinic where a toddler's family receives most care, couldn’t diagnose a problem. Their child needed to see a specialist, but no local dermatologist would agree to accept Medicaid, the government’s safety net plan. Instead, Antonia Mejorado, 33, has to drive nearly two hours to see a dermatologist willing to treat her daughter's potentially serious illness.

“There is not a doctor around here that takes Medicaid,” said Mejorado, whose husband, Osvaldo Soto, 33, has recently seen his hours cut to almost nothing at a local mechanic shop.

When workers get laid off and lose their health insurance, the medical insurance plan that covers some 60 million poor, elderly and disabled people, is a critical safety net. At no time is Medicaid more needed than during an economic downturn. Yet it’s also precisely during a recession that Medicaid’s shortcomings are clearest.

Medicaid, the second-largest item in most state budgets, after education, is funded jointly by the states and the federal government, with the federal government matching state dollars by as much as 76 cents to every 24 cents of state money. Wealthier states bear a bigger share of their Medicaid costs than poorer states do.

But in a recession, state revenues sink at the very time that more unemployed people sign up for Medicaid.

Over the past year, enrollment in Arizona, for example, has increased by 13 percent. It has jumped by 100,000 in the last four months alone. Medicaid enrollment in Alabama has been increasing at 5,000 per month for the last six months. In Indiana, enrollment rose by more than 17,000 between January and April, up about 9 percent from the previous year. In the stimulus bill passed last January, Congress rushed $30 billion to the states to keep Medicaid afloat, with an increase in the normal federal matching fund formula.

The Recovery Act’s additional Medicaid money accounts for nearly two-thirds of all the stimulus funds going to the states in the current fiscal year, according to the Government Accountability Office.

But even as states get their Medicaid windfall, some needy people complain that they’re not getting care under the program, because they are not eligible due to their states’ restrictive rules, or because they can’t get to see a doctor even though they are signed up for Medicaid.

About one in five physicians say they are not accepting any new Medicaid patients, largely because of low payments or delays in reimbursements, according to the Center for Studying Health System Change in Washington, D.C.

Ashley Soto, the 2-year-old with unexplained hair loss, is eligible for Medicaid because she was born in this country. The child’s parents, who are from Mexico, are not. Her mother worries that a serious diagnosis could mean more long days traveling the 75 miles between Goshen and Michigan City, Ind.

“A lot of things are scary — not having a doctor nearby in case something happens to her,” said Mejorado, who is also the mother of three other children ages 17, 14 and 14 months.

The problem is that low reimbursements and complicated, time-consuming paperwork have left many physicians wary of the program, noted Cindy Hayes, director of physician services for Elkhart General Hospital in nearby Elkhart, Ind. Some clinics in the region have stopped accepting Medicaid completely, while others have waiting lists for appointments. At Elkhart General, hospital officials have worked hard to reopen Medicaid access to pregnant women who need prenatal care, plus labor and delivery services, she said.

“We rely on reimbursements from other payers to compensate for Medicaid,” said Hayes. “We’re taking our fair share.” Some doctors who have stopped accepting Medicaid patients say that it’s not that they don’t want to see them, it’s that they can’t afford to anymore.

Medicaid reimbursement rates can be as much as 40 percent lower than those for private insurance, according to John Holohan, the director of the Health Policy Research Center at The Urban Institute, a Washington think tank.

Michigan, for example, recently announced a 4 percent cut in payments to doctors, dentists and hospitals who treat Medicaid patients. The move prompted a new exodus of doctors who’ve decided to limit care. "I love what I do, but I can't keep getting cuts from Medicaid," Dr. John Pfenninger, a family physician in Midland, Mich., said. "It's time to say no. "

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