As part of the economic recovery/stimulus package of 2009, Congress approved in increase in federal funding levels for Medicaid. Unlike Medicare, which is funded entirely by the federal government, Medicaid is jointly funded by the federal and state governments. The increased levels provided bumped the federal portion of payments up to ~65% of the total burden. It's hard to pinpoint the numbers because it varies from state to state with wealthy states receiving less support and poor states receiving more.
These increased levels drop back down to the pre-stimulus levels at the end of the June forcing states to adjust. The extra aid was originally scheduled to end last December, but Congress extended it for six months after being petitioned by both the White house and state officials. Now that the extra ~10% is ending thanks to political posturing and focus on national debt, individual state's must now find a way to compensate.
One method for California is to cut payments to recipients and physicians. Of course, these beneficiaries took the American way and sued the state to block the cuts. The case made it to the Supreme Court, but the Justices sided with the state. The 10% nibble might just be the beginning with enormous deficits (and incumbents' seats) causing turmoil. The long-term implications from such cuts are much more frightening. More physicians will likely refuse service to medicaid patients, forcing the latter to visit the ER as a sole means of care. By law, an ER can't refuse a patient even if they have no insurance or means to pay. Likely the shift from visiting general practitioners to showing up at the hospital means a couple of things: longer lines in the ER and in increase in hospital premiums to compensate for the costs (losses) associated with an overrun ER.
In addition to, or instead of, reducing Medicaid payments to providers, some states are finding other options. New York is imposing a cap on Medicaid spending. Connecticut is proposing more precise cuts and is only setting limits on vision and dental coverage. The rest of the states are reporting some combination of truncating payments to providers, reducing beneficiaries services while increasing co-payments, and shifting funds from other state-funding programs (like education) to offset the changes.
As a result of political impotence, combined with the alleged public outcry, there is no universal health care, nor is there any legitimate replacement for Medicaid anywhere on the horizon. Like Senator Rockefeller IV said about the beneficiaries, "Seniors vote. But if you are poor or disabled, you might not vote, and if you are a child, you do not vote - that's a lot of Medicaid's population. They don't have money to do lobbying." I'm concerned that this is the beginning of the end for Medicaid. My advice? Don't get born, don't get poor, and don't get old.
That, or you can go rob $1 from a bank to get a better life.