New Jersey Seeks To Shrink Medicaid

Cash-strapped states are rethinking how much health care coverage they can afford to provide for their neediest residents. New Jersey Gov. Chris Christie wants to cut $500 million in Medicaid spending — in part by freezing more than 20,000 state residents out of the program. Critics say the cuts would hurt those who can least afford it.

For years, New Jersey expanded health care coverage for low-income residents — people like Deborah Shupenko of Passaic. But last month, after 10 years of state-funded health insurance, Shupenko got a letter in the mail.

"It's expected that my last day of New Jersey Family Coverage will be July 31, 2011," she said.

Shupenko says she had no idea this was coming.

"I was shocked," she said. "I was floored."

Shupenko suffers from many medical conditions, including asthma and osteoarthritis. She's unemployed. At 56, she is too young for Medicare, but too sick to find affordable insurance on her own.

"The worst scenario is something catastrophic happens to me, I could lose everything," she said. "A large hospital bill, or a large doctor's or surgical bill, I could be out in the street. I could be homeless."

'Out Of Control' Costs

Shupenko is one of about 1,400 New Jersey residents who are losing their state-funded insurance coverage this year. And Gov. Christie, a rising star in the Republican Party, says New Jersey has no choice but to make even deeper cuts in health care spending.

"Medicaid's growth is out of control," he said in February, during his budget address. "We must manage it better. Spending in Medicaid will grow by nearly $1 billion over last year. That is the definition of an out-of-control program."

A few weeks ago, the Christie administration released more details about how it intends to manage health care costs. The most controversial part of New Jersey's plan would block access to Medicaid for an estimated 23,000 people next year — and it would do that basically by disqualifying any adult who makes more than $6,000 a year.

Democrats — including state Sen. Joe Vitale — are vowing to fight the cuts.

"We've seen a steady march backward over the last two years — huge leaps in slashing access to affordable health care for hundreds of thousands of New Jerseyans," Vitale says. "It's reprehensible."

A Modest Proposal?

The federal government is slated to pick up the tab for a major expansion of Medicaid, but not until 2014. In the meantime, states have to apply for a special waiver from Washington if they want to make big changes to Medicaid eligibility. Compared with other states — notably Arizona — the changes New Jersey is seeking are modest, says Jeffrey Brenner, director of the Camden Coalition of Healthcare Providers.

"To Governor Christie's credit, he has chosen to innovate, and to try and make Medicaid deliver better care at lower cost," Brenner says. "So we need to put this in perspective."

Even with the proposed cuts, Brenner says, New Jersey's Medicaid program would still enroll roughly 1 million people. But that's little comfort to Crystal Snedden of New Jersey Citizen Action. She doubts the Christie administration's proposed Medicaid cuts will really save as much money as advertised.

"On paper, according to their budget, it will look like they've saved money, but we all know that over the long run, it's going to cost us more money in charity care, and more money in a sicker population," she says.

New Jersey's waiver application isn't officially due until the end of the month, but opponents are already urging the Obama administration to reject key parts.