WITH TAX REVENUES plummeting by record rates — 15 percent during the last fiscal year, the largest single-year drop in Massachusetts history — the state is in a bona fide budget crisis. The simple solution offered by most politicians is to trim the fat. But a look at one of the juiciest targets in the budget — Medicaid — shows just how difficult "trimming the fat" actually is.

There's no question about it: state spending on Medicaid (also known as MassHealth), the joint state-federal health-care program for the poor and disabled, is a budget buster. The nearly $6 billion account — ballooning 25 percent annually — is the single-largest and fastest-growing line item in the budget, and that makes it a prime target for the ax. "Medicaid has naturally drawn the attention of budget-makers," says Michael Widmer, who heads the Boston-based Massachusetts Taxpayers Foundation (MTF). "It’s impossible to produce a balanced budget without getting control over such a large share of the budget."

Budget cutters don’t stop there, of course. Within Medicaid, one line item stands out — that for prescription-drug benefits — and its most-costly expenditures are on psychiatric medicines. The state Division of Medical Assistance (DMA), which administers Medicaid, manages a pharmacy budget that accounted for $941 million, or nearly one-sixth, of the $6 billion spent by Medicaid during the last fiscal year, an 18 percent jump over fiscal year 2001. Psychiatric medications consume 47 cents of every dollar spent on the 1.4 million prescriptions Medicaid fills each month. To hold down these costs, the DMA has asked doctors to reconsider the common-yet-questionable approach to treating the mentally ill: "poly-pharmacy," or prescribing multiple and duplicative types of antidepressants, antipsychotics, and mood stabilizers for the same patient. "In my clinical work, I have observed that patients are on even more medicines than they were five or 10 years ago," says Kenneth Duckworth, the deputy commissioner of clinical services at the Department of Mental Health (DMH), adding that spending on poly-pharmacy treatments has spiraled out of control. Annette Hanson, the medical director at the DMA, puts it more succinctly: "Poly-pharmacy has become a huge problem for the state."

By looking to pare down poly-pharmacy to cut costs, the agency has steered clear of draconian restrictions on access to psychiatric medications — medications that enable thousands of mentally ill residents in Massachusetts to lead normal, productive lives. Psychiatric drugs keep people who suffer from mental illness stable and, as such, out of the state’s hospitals, its streets, and even its jails. Still, although cutting the agency’s poly-pharm approach may seem well-advised at first glance, it shows just how difficult it can be for administrators to cut costs without directly harming residents in the long run — in this case, the most vulnerable. That's because any savings the DMA can achieve on drug expenditures isn’t likely to make up for the program’s projected $587 million growth in spending this fiscal year. Such a disparity, according to the MTF’s Widmer, "speaks to the enormity of the Medicaid problem." In the end, he says, "We’re just borrowing time to try to hold the program together within an environment of plummeting revenues and soaring health-care expenditures. We cannot really tame Medicaid without squeezing and squeezing the recipients."