With shrinking budgets, states cutting health services

Jun 5 2009

As state revenues continue their downturn due to the recession, 16 states are trying to find ways to deal with increased health care costs, The New York Times reports: "The carnage in state budgets is getting worse, a report said Thursday, with places like Arizona being hurt by falling revenue on multiple fronts, like personal income and sales taxes. Other states are having mixed experiences, with some tax categories stable, or even rising, even as others fall off the map."

The Times covered a National Conference of State Legislatures report on state financial conditions, and how they compared to the last fiscal year. "Thirty-one states said estimates about personal income taxes had been overly optimistic, and 25 said that all three major tax categories - sales taxes, personal income taxes and corporate taxes - were not keeping up with projections."

The greatest decrease in personal income tax collections occurred in New York, where revenues fell by 49 percent compared to last year. The largest drop in sales taxes occurred in Washington, where revenues fell by 19 percent. The biggest decline in corporate tax revenues--44%-occurred in Oregon. "A report issued by the group in April said that spending increases related to the recession, from more people seeking state services, were compounding the impact of a decline in tax revenue. Sixteen states were facing higher-than-anticipated costs for health care ..." (Johnson, 6/4).

In other state budget news:

• The Associated Press reports that Wyoming is cutting $43 million from its Department of Health budget, mostly from Medicaid: "The governor also said he is recommending capping enrollment in the SCHIP Kid Care program at 5,900 participants." The program now has just over 5,500 enrolled (Neary, 6/4).
• Budget cuts in California are threatening Alzheimer's patients, The Los Angeles Times reports: "Among the cuts being discussed to close a projected $24-billion state deficit are proposals to dismantle many of the programs that help California's poorest cope with Alzheimer's" (Zavis, 6/5).
• Delaware joins parts of Washington state as places where Walgreen won't fill Medicaid prescriptions because of reduced payment rates for brand name drugs. State officials maintain that the payment rate drop would help the state offset part of the $800 million budget shortfall, Reuters reports (Wohl, 6/4).
• The Ohio Senate has rejected Gov. Ted Strickland's proposals "that would have reduced the rates insurers can charge people with pre-existing conditions from an average of $800 a month to less than $400, according to the state Insurance Department." The agency said the proposals could have expanded private health insurance to 110,000 state residents, reformed open-enrollment programs and offered state continuation of coverage to employees of small businesses who lose their jobs, Business Insurance reports (Casale, 6/4). 
• The News & Observer reported that potentially deep budget cuts worry North Carolina health officials because they could occur just as the state needs more resources to prepare for swine flu. Dr. Jeffrey Engel, the state's public health chief, warned Thursday about budget cuts up for consideration next week saying, "The perfect storm would be mass budget cuts and a widespread pandemic" (Martin, 6/5).