Outlook Bleak for Health Programs in 2009 « The Washington Independent

Suffering the recession’s painful squeeze, more states are eying cuts to low-income health care programs to salvage their budgets.

At least 19 states have already proposed or installed cuts to public health programs, including Medicaid and the State Children’s Health Insurance Program (SCHIP), according to a report updated this week by the Center on Budget and Policy Priorities, a liberal policy analysis group. Those programs provide health coverage to the states’ most vulnerable residents, leaving state officials and health care advocates worried that affected patients will be left dangling without access to treatment.

Illustration by: Matt Mahurin

“It’s adding enormous hardships for those who rely on Medicaid for their health care needs,” Ron Pollack, executive director of Families USA, a consumer health care advocacy group, said of the trouble facing state budgets. Families USA released a report earlier this month finding that 1 million people would lose their health coverage if the cuts were realized in just eight of the 19 states that have proposed or enacted them.

Pollack said the problems will only get worse if the recession deepens, as many expect it will next year. “With each passing week we’re hearing of more states [proposing health cuts],” he said, “and I expect we’re going to see that accelerate in January.”

The threat to these public health programs arrives as most states are caught in an ugly economic cycle. Unemployment is up, creating greater demand for expensive social programs like food stamps and Medicaid, while home values and consumer spending are down, leaving less revenue from sales and property taxes for states to fund those programs. And the fiscal gaps are growing.

At least 41 states and the District of Columbia face 2009 budget shortfalls totaling $42 billion, CBPP has found. Looking ahead to 2010 and 2011, the number of struggling states rises to 44, while the shortfall figure skyrockets to $350 billion.

Compounding these troubles, almost every state in the country has some form of legal balanced budget requirement, meaning that, unlike the federal government, they can’t simply fall back on deficit spending to survive the recession. Instead, legislators have been forced to hike taxes, lay off state employees and cut back on services. Medicaid and SCHIP, because they represent one of the largest chunks of state budgets, have been early targets for cuts.

Indeed, California is increasing co-payments and reducing dental services under SCHIP, CBPP found. In Maine, some patients will be hit with a $25 Medicaid enrollment fee, which will likely discourage participation. In South Carolina, new income-eligibility rules are expected to push 3,700 folks out of Medicaid, CBPP reports. Arizona is forcing some Medicaid patients to reapply more frequently, which is expected to reduce the rolls, even among those eligible for the program, CBPP said.

Ann Kohler, director of the National Association of State Medicaid Directors, said states that are traditionally reliant on the finance industry for revenue — New York, New Jersey, Rhode Island and Connecticut — have had a particularly tough time balancing their budgets as that industry has collapsed. “It’s become very dire,” said Kohler, who once headed the Medicaid programs in New York and New Jersey.

There are many other examples. In Michigan, another state that’s been crushed by the downturn, Medicaid enrollment is up 70,000 in the last year, said James McCurtis Jr., spokesman for the state health department. In Colorado, Medicaid enrollment is increasing by 2,000 each month, said Joanne Lindsay, spokeswoman for the Dept. of Health Care Policy and Financing.

In New Mexico, where Medicaid enrollment jumped from 408,000 in August 2007 to 450,000 a year later, the legislature has plans to meet next month to weigh potential cuts to the program. As options, officials will consider benefit cuts, rate hikes and reduced outreach efforts, according to Betina Gonzales McCracken, spokeswoman for the state’s Health and Human Services Dept. “We’re seeing the need to reduce our budget across the state,” she said.

Some state officials say the recession’s effects on Medicaid and SCHIP aren’t tangible just yet. Karen Smigielski, spokeswoman for Minnesota’s Dept. of Human Services, said it’s “too soon” to gauge the ultimate impact of the recession on low-income health programs. “It takes awhile for people to get poor enough to become eligible,” she said.

President-elect Barack Obama is piecing together an enormous spending package designed to boost the economy and tamper rising unemployment. Early reports indicate that the package could be in the range of $800 billion, with roughly $100 billion of that earmarked to help states cover their Medicaid costs.

Many experts warn that the budget problems — and their effects on public health — will only get much worse if that stimulus funding is held up for any reason.

“The longer we go without it,” said Kohler, of NASMD, “the more we’re going to need.”