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NEW YORK (CNNMoney.com) — States filled an $84 billion gap to balance their 2011 fiscal year budgets, which took effect earlier this month. But they could collectively face a new $12 billion hole if Congress fails to help cover growing Medicaid costs.

Without another injection of government money for Medicaid, four states — California, Texas, North Carolina and New York — could face new gaps exceeding $1 billion each, while 21 others could see shortfalls over $100 million, according to a quarterly budget report issued by the National Conference of State Legislatures.

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NEW YORK (CNNMoney.com) — For the fourth time this year, doctors face a potential huge cut in the fees that the government pays them to treat Medicare patients.

Physicians will be hit with a 21% cut in Medicare reimbursements as of June 1, unless lawmakers decide to patch over the issue — as they’ve done for years. Congress is now debating the matter, and to stop the cut lawmakers would have to vote to pass a new patch sometime in the next two weeks.

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We can be sued into oblivion

Doctors’ fear of multi-million dollar lawsuits is pushing them to practice “defensive medicine.” More doctors are ordering additional tests and procedures not based on need but fear of liability.

The government estimates that cost of medical malpractice is less than 2% of overall health care spending. Industry experts say defensive medicine accounts for about 10% of health care costs, or more than $100 billion annually.

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My husband and I are both self-employed, so we can’t wait to find affordable health care for ourselves and for our employees — probably through an exchange program or with the help of tax credits.

Right now, we carry only a catastrophic policy for ourselves. We’re not getting the preventative care that we would like because it’s all out-of-pocket. Our deductible, before the catastrophic plan would kick in, is $10,000 per year.

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NEW YORK (CNNMoney.com) — You probably cost your boss a lot more than you think you do.

For Jim Garland, who owns a corporate aircraft cleaning and support services company, a $14 per hour worker has a true cost of $19.63 per hour, or about 40% more than base pay. This so-called “loaded rate” includes fixed expenses — federal and state taxes, health insurance, workman’s compensation, uniforms, and paid time off — along with soft costs like the time spent training a new hire.

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NEW YORK (CNNMoney.com) — The sweeping health-care bill passed by the House of Representatives Sunday, and now headed for President Obama’s desk, promises a sea change in the way that small business owners purchase and provide health insurance for themselves and their employees.

But many of the provisions won’t kick in until 2014 — and the final rules could still be changed by amendments that will now be considered by the Senate.

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On Monday, the insurer announced that it would sell foreign life insurance business Alico to MetLife (MET, Fortune 500) for $15.5 billion. Last week, AIG said it reached an agreement to sell Asian life insurance giant AIA for $35.5 billion.

That’s $51 billion that AIG said will eventually be used to pay down its debt to the government. The two sales mark the most significant progress that AIG has made to-date in its efforts to repay its bailout, which is worth up to $182 billion.

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NEW YORK (CNNMoney.com) — More than 1 million people could lose their jobless benefits and health insurance subsidy in March if Congress doesn’t act fast.

When it returns from the President’s Day recess on Monday, the Senate will have one week to extend the deadlines to apply for federal unemployment benefits and the COBRA health insurance subsidy. Currently, the jobless have until Feb. 28 to sign up.

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(Money Magazine) — Last month was open-enrollment season, and my wife and I got an unpleasant surprise. For 2010 we’re looking at an annual health-insurance premium that’s $1,600 higher than it is now, plus higher deductibles. Instead of flat co-pays, we’ll pay co-insurance, a share of the total costs. And this is with a plan provided by a Fortune 500 company that still spends big bucks on relatively generous benefits.

You may well be in the same boat. According to human-resources consultant Hewitt Associates, the average large-company employee will pay $4,023 in premiums and out-of-pocket costs next year — 10% more than in 2009 and more than three times the level in 2001.

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NEW YORK (CNNMoney.com) — Shares of AIG plunged nearly 15% Monday after an analyst hacked the insurance giant’ price target 40% in a research note on worries about the company’s loss reserves.

AIG (AIG, Fortune 500)’s stock fell 14.71% to $28.40, after trading at session low of $28.04. The shares finished down almost 50% off their 52 week-high of $55.90.

In a research note, Bernstein Research analyst Todd Bault told investors he cut AIG’s price target to $12 from $20 and said the insurer’s “loss reserves are significantly deficient again, much sooner than we would have forecast two years ago.”

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NEW YORK (CNNMoney.com) — Some 5,000 patients suddenly found themselves without an ob/gyn last November when Dr. Tara Wah closed her practice in Tallahassee, Fla.

Wah, 55, informed her patients in a letter that she could “no longer afford to make ends meet.”

After 24 years, “I’m working longer hours than ever,” she wrote. “Insurance payments for patient care have stayed virtually the same for the last 15 years, while the cost of doing business, including health insurance, staff salaries and supplies have risen.”

The rising cost of malpractice insurance, particularly for her specialty, was the straw that broke the camel’s back.

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WASHINGTON – The poverty rate among older Americans could be nearly twice as high as the traditional 10 percent level, according to a revision of a half-century-old formula for calculating medical costs and geographic variations in the cost of living.

The National Academy of Science’s formula, which is gaining credibility with public officials including some in the Obama administration, would put the poverty rate for Americans 65 and over at 18.6 percent, or 6.8 million people, compared with 9.7 percent, or 3.6 million people, under the existing measure. The original government formula, created in 1955, doesn’t take account of rising costs of medical care and other factors.