A budget shortfall in the state's Medicaid program is easily the biggest insurance issue facing Mississippi.

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Lingering economic weakness has hurt the Medicaid program in many states and Mississippi, where the program is growing 20 to 25 percent per year, is no exception. Although Mississippi Gov. Ronnie Musgrove has signed legislation to erase most of the $158 million deficit in the state's Medicaid program for the remainder of the 2002 budget year, lawmakers may still have to hold a special session this summer to address a $157 million Medicaid deficit for fiscal year 2003.

In an effort to reduce the program's costs, Musgrove has signed into law a 5 percent cut in reimbursement to Medicaid providers. The law reduces pharmacists' dispensing fees from $4.91 to $3.91, but legislators say they are concerned it won't be enough. Mississippi Rep. Steve Holland (D-Plantersville) says lawmakers may be forced to change the state's Medicaid eligibility rules, which could remove more than 23,000 patients from the program.

Medicaid is the joint federal-state program that provides health insurance to 36 million low-income people. Mississippi has 650,000 Medicaid recipients and the state pays pharmacists the cost of the patients' drugs plus a flat fee. The problem is that Mississippi, like other states, is trying to cut its budget due to economic pressures at a time when health care costs are skyrocketing.

Mississippi Medicaid recipients worry that the largest chain drugstores, such as Rite Aid and Walgreens, may stop serving them, reduce their pharmacy hours, or close stores if the situation worsens. Both drugstore chains have reported they are considering the possibility of cutting participation in Medicaid prescription programs in Washington state, where Gov. Gary Locke has slashed millions from his state's Medicaid budget.

The impetus for states cutting pharmacists' dispensing fees comes from a United States Department of Health and Human Services report warning them that they are overestimating wholesale drug prices and overpaying pharmacists by more than $1 billion a year. The August 2001 report recommended cutting pharmacy payments by about 10 percent.

"There's certainly no love lost between drug companies and lawmakers right now," says Liz Carroll, spokesperson for the Mississippi Medical Association.

For more information on the Medicaid program, read Understanding Medicaid.