With Utah's economy in the doldrums, Medicaid's rolls are on pace to grow by nearly 20,000 people, or 13 percent, by the end of this fiscal year.

Now the Utah Department of Health (UDOH), which did not receive any new funding for its increasing caseload, is estimating it needs $14 million in supplemental money -- an amount it hopes to see in Gov. Jon Huntsman Jr.'s budget today.

Absent that boost, Medicaid could be faced with making cuts where it legally can -- such as dropping coverage for aged, blind and disabled residents who live between 75 percent and 100 percent of the Federal Poverty Level (FPL).

Their coverage -- along with women with breast and cervical cancer who live at 250 percent of the FPL -- is not required by the federal government, explained Michael Hales, state Medicaid director.

Other possible cuts, he said: lowering reimbursements to doctors and dentists, and trimming health services considered optional, as was done with vision and physical therapy benefits.

"We will see what happens," Hales said. "We hope for the best and recognize there are a lot of important state programs that are suffering -- and the Medicaid program has been among those for sure -- but we will administer the program with the funding we are appropriated."

In the past five months alone, nearly 9,000 people have enrolled in the public health insurance program for low-income residents, a third of them just in October. It's a trend Hales expects will continue well into fiscal year 2010, when Utah's budget will likely be even leaner.

"They (lawmakers) may not give us the full amount (for FY 2010) because of uncertainty in the growth rate and the economy," Hales said, putting UDOH in a situation where it would once again have to plea for supplemental dollars.

It's a situation that is all too familiar to Medicaid, a countercyclical program that sees the number of beneficiaries it serves shrink when times are good and swell when the economy sputters.

This round, however, the program may simultaneously find itself on the state's chopping block for the second time in a fiscal year.

During the September special session, Medicaid cut $8.5 million in general funds from its budget, triggering the loss of $19.6 million in federal dollars. Optional services such as vision care and physical therapy were dropped, and a 2 percent inflation increase in provider payments was rolled back.

Since then, the state's revenues have continued to plummet, prompting legislative leaders to express broad support for another special session. Outgoing Senate President John Valentine has said an average, across-the-board 7 percent cut is possible.

Advocates, meanwhile, are calling on lawmakers to hold Medicaid harmless.

Judi Hilman, executive director of the Utah Health Policy Project, said the state should instead consider a number of cost-saving measures.

For example, doctors can sidestep Medicaid's preferred drug list -- aimed at cutting costs -- by simply writing "dispense as written" on a more expensive prescription. Hilman suggests stricter enforcement of the list and cracking down on physicians who don't comply. She also suggests changing contracting arrangements for managed care and using tobacco taxes to expand eligibility for programs like Medicaid and the Children's Health Insurance Program.

"It [Medicaid] is a bare bone program. There's just no fat to cut anywhere," Hilman said, "and Medicaid should be strengthened if we want to do health system reform."

Keith Horwood, a physician at Oquirrh View Community Health Center in Taylorsville and medical director of Community Health Centers Inc., said Medicaid cuts could impact care for his patients. Medicaid dollars help cover the clinics' overhead, and dipping into that could hurt their ability to keep or hire more practitioners.

"If one of our more reliable funding streams gets choked off, it's not ethical for us to hire," he said. "'We hope we'll be able to afford you six months from now, but maybe not.'"

If Medicaid patients lose all or part of their benefits, the clinics must continue to serve them anyway, despite the loss of revenue. "The only real way we have to respond to that, then, is we restrict access to the uninsured who are not yet our patients," he said.

Turning the uninsured away, Horwood said, means they'll forgo care, or show up in emergency rooms with primary care-sensitive conditions. "It's hard to look and see [how] a dollar this year is going to save $4 or $5 next year," he said.

lrosetta@sltrib.com