States scrambling to address Medicaid costs due to reduction in federal funding

A recent article on CNNMoney discusses how states are bracing for an impending cut in federal funding for Medicaid. Due to the American Recovery & Reinvestment Act, states received an average of $2.68 for every dollar they spent on Medicaid. This was up from the original funding level of $1.61, according to the figures provided by the Council of State Governments. Federal funding for the program is decreasing incrementally until July 1st, when funding will reach pre-stimulus levels.

With current enrollment rates at nearly 49 million or almost 1 in 6 people, states are looking to address the shortfall by enrolling program participants into managed care programs, eliminating or charging for certain services and slashing rates to providers.

The role of incentives to change unhealthy behavior

Today, Newsweek published an article that takes a look at the role of health incentives meant to change behavior. The article describes research that was released at this week's International AIDS conference that shows that cash payouts made to young women in South Africa has been successful in deterring the spread of HIV.

Would a similar strategy of financial rewards help those in the U.S. engaging in unhealthful behaviors change their ways? Programs are being made use of by companies trying to reign in out of control healthcare costs. But do these programs provide meaningful gains in the long-run? One small study points out that while participants were enrolled in a program that provided financial incentives as well as lifestyle counseling, the average participant lost between 13-14 pounds while participants in another group that only received counseling lost almost 4 pounds. But for participants in both groups, the weight returned once the program was over.