 |
|
Medicaid
Budget Cuts: How Deep Will They Go?
2006 Medicaid Budget Cuts: How Deep Will They Go?
Despite Michigan’s exploding Medicaid caseload, it appears certain that the governor and legislature will make another round of deep cuts to the state’s 2006 Medicaid health care budget. State records now show that nearly all of the skyrocketing growth in Michigan's Medicaid program in the last five years has been among low-income families and children, who account for 89 percent of the increase. A record 1.5 million Michigan citizens now depend on Medicaid for their health care. The House, Senate and governor are spending the summer months trying to agree on how much to cut from Medicaid patient care in 2006. The governor’s 2006 budget proposes the smallest Medicaid cuts — but still total $125 million. The House version offers the deepest reductions, totaling about $200 million. Major Medicaid cuts have been expected for many months because the state is facing a budget deficit of roughly $800 million for fiscal year 2006, which begins Oct. 1. Medicaid has already been slashed by more than $540 million since 1998, including nearly $40 million in reductions in the executive order approved by the governor and legislature in late March. Additional Medicaid cuts will result in:
Hospitals Urge Caution on Tobacco Settlement “Securitization”
Health care for thousands of Michigan children and frail and elderly citizens could be seriously threatened if the legislature and governor move to “securitize” the state’s share of the national tobacco settlement. Lawmakers and Gov. Granholm appear to be moving toward a deal that would result in Michigan immediately cashing in most or all of its share of the tobacco settlement. States that securitize their tobacco settlements basically trade their future annual payments for a large, one-time payment. The major down side is that the one-time payment — estimated at $3 billion to $4 billion — would not come close to the amount that the state would receive by collecting payments annually over time. If Michigan securitizes the settlement, most lawmakers and the governor have said they would use the funds for unspecified economic development initiatives intended to create jobs and spark economic development. Currently about $100 million a year in tobacco settlement funds help cover health care services for Michigan citizens. If the settlement is securitized, tobacco settlement funds for health care would disappear after about three years. “Medicaid is already underfunded by more than $1 billion in Michigan,” said MHA President Spencer Johnson. “In addition, Medicaid has been cut by more than $540 million since 1998, and it appears cuts of at least $125 million more will be made to Medicaid patient care next year.” Johnson concluded, “If the tobacco settlement funds dry up, that will blow another huge hole in the Medicaid budget, and it could virtually end health care for thousands of Michigan children and families.” State Lawmaker Seeks Adequate Medicaid Payments The state of Michigan would be required to issue annual reports that disclose the substantial differences between Medicaid and Medicare reimbursement rates for the same medical procedures under legislation introduced by state Rep. Kevin Green (R-Wyoming). Neither Medicare nor Medicaid reimbursement rates cover the actual costs of providing health care treatments and services. But because of massive cuts to Michigan’s Medicaid patient care budget, Medicare reimbursement rates are higher than Medicaid reimbursement rates for the exact same medical procedures. To protect access to health care for Michigan citizens, the Partnership for Michigan’s Health, which includes the Michigan Health & Hospital Association, the Michigan State Medical Society and the Michigan Osteopathic Association, has urged the state to set Medicaid rates that are comparable to Medicare rates for similar health care services. Hospital Charity Care on Rise as Uninsured Ranks Increase, Report Says
Fueled by rising numbers of uninsured Americans, hospitals are absorbing higher levels of charity care and bad debt and may be providing far more free care than the $25 billion they report annually, according to a report by PricewaterhouseCoopers. The report examines the changing landscape for hospital charity care based on interviews with health care leaders and a survey of 100 hospital financial executives by the firm’s Health Research Institute. Charity care numbers may be underestimated because of the "burdensome and expensive process that hospitals must go through to classify a patient as charity care," the report concludes, noting that 92 percent of the hospitals surveyed said at least part of their bad debt could be classified as charity care. The report notes that uncompensated care, of which charity care is a component, increased by 20 percent from 1999 to 2003, to $24.9 billion. Michigan’s nonprofit community hospitals provided $1.1 billion in uncompensated care and $331 million in free or reduced-fee community programs in 2003 (the latest figures available), according to the MHA 2005 Hospital Community Benefits Report released in March.
“It’s (Also) Health Care, Stupid.”
Recall the 1992 campaign quip from then-presidential candidate Bill Clinton: “It’s the economy, stupid.” Today, the state of Michigan’s economy remains a clear cause for alarm. But so, too, is the state of Michigan’s health care system. Michigan’s unemployment rate is nearly the highest in the nation. But so are the rates of tobacco use and obesity among Michigan citizens. Michigan also nearly leads the nation in cases of diabetes and chronic heart disease. Michigan’s manufacturing job losses continue to mount. But also climbing is Michigan’s Medicaid caseload, which now stands at nearly 1.5 million Michigan children, single mothers, elderly and disabled citizens. Now comes a proposal to “securitize” Michigan’s tobacco settlement. Under the scheme, the state would sell off most or all of its future annual tobacco settlement payments. Each annual payment includes about $100 million a year for health care services for Michigan citizens. For selling all future payments, the state would get a lump-sum payment of $3 billion to $4 billion. That’s a significant immediate jackpot, for sure, but totals far less than the state would collect by taking the annual payments.
Would any of the securitized funds go to health care? Given Michigan’s deplorable health status and soaring Medicaid caseload, the answer to that question would seem to be an obvious “yes.” But to date, most Lansing politicians have said they would spend all of the funds on “economic development” initiatives that they have neither developed nor identified. These same politicians also have not said how they would plug the annual $100 million hole that such a move would blow in the state’s health care budget. |
