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Medicaid funding cuts affect people with AIDS across the U.S.

[The first of two articles on the crisis in public benefits for people with HIV/AIDS.]

It is not commonly known that the Medicaid program (MediCal in California) is the single biggest source of publicly funded AIDS treatment in the United States -- bigger than Medicare and bigger than the Ryan White Care Act. Medicaid spent $6.9 billion on people with AIDS in Fiscal Year 2001 (1), more than three times as much as all titles of Ryan White. (2) The program provided health care, including prescription drug coverage, for roughly 260,000 low-income and disabled people with HIV/AIDS during 200l (3); for comparison, the AIDS Drug Assistance Program served about 140,000. (4)

In the mid-to-late 1990s, many states, buoyed by increased revenues brought on by the economic boom, expanding Medicaid eligibility criteria for children, the elderly, the disabled and other groups. (5) But by early 2001, the economy had drifted into recession and states were struggling to pay their Medicaid bills with diminishing resources. Since then, many have reduced patient eligibility, limited prescriptions, and cut services at a time when programs like the AIDS Drug Assistance Program are also stretched to the breaking point.

"I can't think of one state that isn't having problems," commented Neva Kaye of the National Academy for State Health Policy. "There's a reason for the expansions in the past few years - Medicaid programs saw a need. They don't want to step back, but there is only so much money in the system."

In a recent survey by the National Conference of State Legislatures, Medicaid was the number one program named as being over budget: 27 states and the District of Columbia reported Medicaid cost overruns, with four others indicating concern about Medicaid spending. (6) It is usually the second biggest state expenditure after education, and many states are required by law to balance their budgets.

People with AIDS from Massachusetts to Oklahoma have been affected by the cuts. Some of the hardest hit are sick PWAs who require intensive medical care and numerous prescription drugs but are least able to muster the resources they need to get them. For instance, the Florida Medicaid program has instituted a cap of four brand-name prescriptions per month, with a time-consuming appeals process for patients who must override the cap to receive important medications. (7) Although HIV drugs are theoretically exempt from this limit, newly approved antiretroviral drugs are often kicked out of the computer -- and some pharmacists are not even aware of the HIV rule. Other states are also exploring drastic measures: in South Carolina, legislators are considering a bill that would require Medicaid beneficiaries to reapply to the program every six months. (8)

A Culprit: Skyrocketing Prescription Costs

According to independently funded public policy analysts, the most important factor in the Medicaid budget shortfall is the rapidly escalating price of prescription drugs. Medicaid drug spending grew 18.1% per year between 1997 and 2000, more than twice the overall growth of the program. (9) Meanwhile, a recent Fortune 500 report named the US pharmaceutical industry as the most profitable in the U.S.: industrywide, profits were also running $18.5% in 2001. In comparison, Medicaid enrollment is nearly stagnant: the number of enrollees increased less than 5% between 1999 to 2001, from 42 million to 44 million (10).

Unlike Ryan White money, which is distributed through a system of formulas, Medicaid funding is keyed to the amount of money a state elects to spend on the program. State funds are matched at least 1:1 by federal dollars. (11) As a result, some states have well-funded programs, while poorer states -- or states where Medicaid spending is not a high priority -- do not.

The Medicaid program also suffers from anonymity: citizens are only dimly aware of what it is, exactly, and whom it serves. Few people realize that nearly half of Medicaid beneficiaries are children--and that at least 55% of all the people with AIDS in the United States are on Medicaid. Among other groups, the program serves many formerly middle class men with AIDS (and some women) who have spent down their assets in order to qualify for health coverage.

Without a visible constituency, Medicaid recipients are especially vulnerable when it comes time to make state budget decisions. There are no national groups for Medicaid AIDS advocates, and few state advocates at all for people with AIDS -- even though a key to better AIDS care nationwide lies in pushing state legislatures to adequately fund the program and pull down federal matching funds.

A Florida Example

In the current recession, the number of people who need Medicaid is increasing just as revenues to support it are drying up. The state of Florida typifies this phenomenon: the state is facing enormous budget shortfalls while its prescription drug costs have skyrocketed.

Michael Barry, a 42 year-old PWA living in Titusville, Florida, had to fight for months to obtain his medications because of the state's prescription cap. Barry, who tested HIV-positive in 1985, has a CD4 count of only 7, suffers from severe opportunistic infections, and requires more than two dozen different medications. His physician prescribed Valcyte for CMV, Kaletra for his HIV, and Neupogen to boost his white blood cell count. The state rejected his prescriptions for all three.

His physician, Gerald Pierone, M.D., also spent months pushing the state to approve these medications. Finally Barry, who lives on a $604 disability benefit, was forced to hire a disability lawyer to press his case at a formal appeal. As the appeal dragged on, he went without Neupogen for three weeks. He eventually won the appeal and received the drugs, but must reapply for them again in six months. Barry says that some of his friends are getting sick without medications because they don't have the energy to obtain them under Florida's Medicaid system. "If you don't fight, you die," he says.

Pierone concurs. "Some of my patients who need Neupogen have gone through lapses that can potentially threaten their health. I have had to keep patients in the hospital for two or three days until the state approved their Valcyte prescriptions. If I have a sick person with AIDS on ten different drugs, many of them will be brand-name and we will have to make dozens of phone calls to get them approved -- if they are approved. Ultimately, the patients who have it together will call us when they are denied a medication. The ones who aren't as sophisticated just do without -- we may not find out about it for two or three months."

With nearly every state affected, the health of some 260,000 low-income people with AIDS is at risk. Every day, thousands of vulnerable people are trying to wade through paperwork and overcome new obstacles to obtain basic medical care.

At the same time, thousands more do not qualify for Medicaid at all: the program only covers people with an AIDS diagnosis. One solution to this problem may be the Early Treatment for HIV Act, which would make people who are HIV-positive eligible for Medicaid if they meet their state's income requirements. The bill would provide a stable source of medical care to many thousands of people and would relieve pressure on Ryan White programs.

Barry urges other people with AIDS to lobby on behalf of increased AIDS funding. "If you have to, go to Washington and fight for your rights. And vote for politicians who support people with AIDS." Barry recently returned from a trip to Washington, DC where he visited members of Congress to advocate for more AIDS funding for Florida.

Information Resources

* The Kaiser Family Foundation publishes detailed, reliable reports on HIV, Medicaid, the uninsured, and prescription drug coverage (including the AIDS Drug Assistance Program). Recent publications on Medicaid and prescription drugs can be accessed at:

* Fact Sheet on Medicaid and AIDS:

* Families USA

While not AIDS-specific, Families USA has issued a number of useful Medicaid reports and created advocacy tools such as this state advocate's kit for lowering prescription drug prices:

* Early Treatment for HIV Act. For more information, contact Ryan Clary at Project Inform, 415-558-8669, ext. 224 or email him: (You can find an archive of past action alerts at, but it's more important is to get on the list for current alerts, because you often need to respond very quickly. Ask to receive regular action alerts and other information on this bill.)

* Prescription Access Litigation. "This initiative targets the illegal activities of pharmaceutical companies that artificially inflate the price of prescription drugs. PAL is a coalition of over 75 consumer and public interest organizations from 30 states."


(1.) Report by Wayne Ferguson, Office of the Actuary, Health Care Financing Administration (now the Centers for Medicare and Medicaid Services), April 30, 2001.

(2.) Claude Franklin, Executive Officer HIV/AIDS Programs, Health Resources Services Administration.

(3.) Center for Medicaid and State Operations, Division of Advocacy and Special Issues. Number includes people who are HIV-positive but do not have an AIDS diagnosis who are enrolled in Medicaid due to a disability apart from HIV.

(4.) ADAP Monitoring Project. The Henry J. Kaiser Family Foundation (KFF) commissions the National ADAP Monitoring Project and conducts it in partnership with the National Alliance of State and Territorial AIDS Directors (NASTAD) and the AIDS Treatment Data Network (ATDN):

(5.) Kaiser Commission on Medicaid and the Uninsured, March 2002. "Medicaid and State Budgets: An Overview of Five States' Experiences in 2001":

(6.) State Fiscal Update, April 2002, by the Fiscal Affairs Program of the National Conference of State Legislatures.

(7.) Jerry Wells, Pharmacy Program Manager, Florida Medicaid Program.

(8.) Republican-sponsored bill being considered in the South Carolina legislature, H 4955:

(9.) "States Strive to Limit Medicaid Expenditures for Prescribed Drugs," Kaiser Family Foundation Study, February, 2002:

(10.) United States Congressional Budget Office.

(11.) "Federal Medical Assistance Percentages and Enhanced Federal Medical Assistance Percentages," Effective October 1, 2002 - September 30, 2003 (Fiscal Year 2003):
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Article Details
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Author:Krauss, Kate
Publication:AIDS Treatment News
Geographic Code:1USA
Date:May 31, 2002
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