States forced to cut health coverage for poor

Economic troubles are forcing states to scale back safety-net health-coverage programs–even as they brace for more residents who will need help paying for care. Many cuts affect Medicaid, which pays for health coverage for 50 million low-income adults and children nationwide, including nearly half of all nursing home care. The joint federal-state program is a target because it consumes an average 17% of state budgets–the second-biggest chunk of spending in most states, right behind education. "Medicaid programs across the U.S. are going to be severely damaged," says Kenneth Raske, president of the Greater New York Hospital Association. He expects some hospitals nationwide may drop services and some hospitals and nursing homes may lay off employees. Among the cuts: * Hawaii this month halted funding for a 7-month-old program aimed at covering all the state's uninsured children. * South Carolina Gov. Mark Sanford must decide by Thursday whether to sign a budget that would slash $160 million in health care, including an 8.1% cut to Medicaid and a 10.8% cut to the Department of Mental Health. Programs to help autistic children, the elderly who need prescription drugs and low-income workers may be hit. * California in July cut payments to hospitals 10% under its Medicaid program, Medi-Cal. It had planned to restore 5% in March, but Gov. Arnold Schwarzenegger has called an emergency legislative session Nov. 5 to deal with lower-than-expected revenues. Health care is a likely target, says Jan Emerson of the California Hospital Association, who expects more hospitals to drop out of Medi-Cal if extra cuts occur. Less than half the state's hospitals currently contract with Medi-Cal. They treat Medi-Cal patients in their ERs, but then transfer them to other hospitals. * Massachusetts this month cut $293 million from its Medicaid budget, including $40 million from the Cambridge Health Alliance for care it already provided to low-income residents. The alliance, which runs three hospitals and dozens of clinics, says that cut plus other state cuts could total an amount equal to the cost of 650 full-time employees–or 20% of its workforce. "We can't absorb that without some serious re-evaluation of what we do," spokesman Doug Bailey says. "Everything is on the table." The cuts follow several years of strong budgets and state efforts to bring health coverage to more low-income adults and children. "When the economy goes down, states have increased pressure (from more uninsured), yet have to curtail plans to broaden coverage," says Diane Rowland, executive vice president of the Kaiser Family Foundation, a non-partisan think tank. For every 1% jump in unemployment, about 1 million more people enroll in Medicaid, the group found in September. Lawmakers in at least 27 states are facing budget gaps just months after dealing with some of the largest shortfalls since the recession in 2001, reports the Center on Budget and Policy Priorities, a Washington think tank. States can only make Medicaid cuts that affect people covered under optional state programs, such as children whose families earn slightly more than federal guidelines require. "We're expecting budget gaps for the rest of this year and into fiscal 2010 to be about $100 billion," says Elizabeth McNichol, a senior fellow at the center. "Health care gets hit hard when states have to cut back."