States deal with small budgets, Medicaid cuts

Feb 9 2010

Virginian-Pilot: Area hospitals are preparing "for a round of Medicaid spending cuts that executives say could be the worst in decades and lead to more cutbacks in their organizations. Rising health care costs and a surge in the number of Medicaid patients have increased the state's obligation to the government health insurance program for the poor and disabled by $777.7 million over two years. The state also must find $1.2 billion to replace stimulus money that the federal government provided last year to help Virginia cope with rising health care demands and declining state revenue. That funding stops at the end of this year." Former Gov. Timothy M. Kaine recommended in his budget proposal that Medicaid payment rates for hospitals be frozen. The General Assembly is trying to set a budget that deals with that as well as absorb a $1.9 billion shortfall in state revenues (Jeter, 2/8).

In a separate article, the Virginian-Pilot reports that Medicaid funding for the disabled is also being cut: "Not only is there no additional funding for the Medicaid waiver program that helps families keep disabled or elderly relatives at home instead of at institutions, but there's a one-year freeze on the existing waivers. That means even if someone already in the program dies, drops out or moves out of state, the money for that slot can't be used for someone on the waiting list" (Simpson, 2/8).

The Tennessean reports on state cuts to mental health care: "Tennessee's mental health agency, already struggling from last year's budget cuts, is facing a double whammy in 2010 -- deeper cuts to its own budget coupled with reductions in TennCare insurance for many of its patients. Advocates for the mentally ill say more reductions in services may endanger lives. ... Since July 2008, [The National Alliance on Mental Illness of Tennessee] has shed nearly a quarter of its staff -- 672 positions -- and more than 247 beds at its state hospital. ... Now, the Department of Mental Health and Developmental Disabilities is facing $9.4 million in additional cuts. For many patients, the newly proposed TennCare health plan cuts will compound the challenge by restricting doctor visits and laboratory tests" (Sanchez, 2/8). 

In a separate story, the Tennessean reports on a possible hospital tax to help raise funds for TennCare, the state's Medicaid program: "Representatives for the hospital industry have suggested bringing back the hospital tax, which expired in 1994 when TennCare was created, to reduce or stave off cuts in state funding proposed by Gov. Phil Bredesen. Those cuts would save the state $380 million, according to one analysis. But they would cost Tennessee two to three times as much in federal aid, amplifying the effect on hospitals and other health-care providers far beyond the state's savings. ... Hospitals estimate that they would lose $526 million in state and federal funding this budget year and next if lawmakers approve the $28 billion spending plan that Bredesen presented to the legislature last week" (Sisk, 2/7).

The Nashua Telegraph reports on cuts to mental health care in New Hampshire: "Six years of incremental budget cuts have left the state's mental health centers on the brink of financial catastrophe, according to mental health experts. They worry that more cuts will push them over the edge. ... It's a position in which all of the state's community mental health centers find themselves to one extent or another, according to a new study released by the Endowment for Health. ... The report closely analyzed a six-year financial history of the centers and discovered that while the mental health system isn't in dire straits, it has no cushion to cover significant losses in revenue. All 10 of the mental health centers are independent nonprofits that contract with the state Department of Health and Human Services on an annual basis. But too much of the centers' revenue, an average of 75 percent of the combined $150 million in 2009, comes from state Medicaid and Medicare reimbursements and a federal match of those funds. The centers lack the ability to shift revenue from other sources to cover cuts in government reimbursements because there aren't many other revenue sources, according to the study" (Cote, 2/7).

Fond du Lac Reporter, on Medicaid cuts in Wisconsin: "Rural hospitals around Fond du Lac say a proposed assessment will help them avoid cutting services or raising prices. Ripon Medical Center and Waupun Memorial Hospital are two of the 59 critical-access hospitals across the state dealing with cuts in Medicaid payments. In an effort to slash costs, the state reduced its Medicaid reimbursements by 10 percent, leaving hospitals to pick up heftier bills for caring for low-income patients. ... The Wisconsin Hospital Association and Rural Wisconsin Hospital Cooperative are drafting a legislative bill that would help restore federal dollars to rural hospitals. Under a special assessment, each hospital would contribute 1.6 percent of its revenue to the Medicaid program. As a result, the federal government would provide matching funds to make up for the cuts" (Stanek, 2/8).

Anchorage Daily News: "As part of an effort to shave earmarks from the federal spending plan, President Obama has proposed cutting $10 million from a Denali Commission program that pays to purchase health equipment and build village clinics and elder housing in rural communities. ... Trying to delete the money has become a routine part of the federal budget-making process. Presidents Bush and Obama have proposed cutting the program each of the past three years, only to see Congress re-inject the money. ... The Denali Commission has steadily lost funding in recent years. The annual budget has fallen from about $141 million in 2006 to $61 million in 2010, according to the commission. ... The president proposes pulling all funding for the commission's health care construction budget, which has parceled out $191 million over the past 10 years and has paid at least partial construction costs for 95 clinics across the state, according to the commission" (Hopkins, 2/7).