Budget Shortfalls Produce Health Care Cuts In Many States

Today, I would like to direct your attention to the Kaiser Network's Daily Health Policy Report of March 31, 2008. Their continuing roundups of pertinent health care news are always useful and informative.*

The reason I would like to focus on this particular new roundup is the overall topic: state level budget shortfalls endangering health care funding. The weakness of the current American economy combined with more than half of U.S. states facing shortfalls in their budgets the outcome for medically oriented spending seems bleak.

The budgetary gaps run the gamut, but generally all fall into the range of billions of dollars. On the lower end we have states like Florida whose shortfall is only about 43 billion, with California taking the lead with a deficit of $16 billion. No matter which side of the spectrum you look at the solution continues to be spending cuts. Medical care is often the first to feel the ax when budgets run low due to the perception of "immediate savings" and the skyrocketing escalation of costs.

California Gov. Arnold Schwarzenegger (R) has already proposed $650 million in cuts to Healthy Families (California's SCHIP program). Those cuts have the potential to affect as many as 7 million people amongst the seniors and disabled of the state's population.

Even in Florida, the ax bites deep as this incomplete list of cuts shows us:

The House proposal would eliminate hospice coverage for 8,000 terminally ill beneficiaries, coverage of hospitalization costs for 20,000 transplant recipients, and diagnosis and care for 2,300 children with cleft lips or cleft palates. The House measure also would eliminate coverage of dental and vision care, as well as hearing aids, for 146,000 seniors to save $32 million. In addition, the budget proposal would reduce funding for the Medically Needy program by $170 million.

A faltering economy and continually rising costs of care have created a climate where this type of news will probably be a daily occurrence. As a nation, we need to implement systems thinking, even out the distribution of health care costs, implement electronic medical records, and basically do whatever it takes to reform our health care "non-system."

*Disclosure: The Health Care Reform Now! Blog does have a relationship with Kaiser due to it being a companion blog to Kaiser CEO George C. Halvorson's latest book, Health Care Reform Now!.

EDIT 4/24/08: The Kaiser Daily Reports are a product (free service) of the Kaiser Family Foundation, which is actually not at associated with Kaiser Permanent, Kaiser Foundation Health Plan or Kaiser Foundation Hospitals. The disclosure above was purely my own error and I greatly appreciate Robin at the KFF setting me straight on the matter! For more info about the Kaiser Family Foundation follow this link.

SOURCE: "Coverage & Access | Cuts to Health Care, Other Programs by States Trying To Address Budget Shortfalls Might Disproportionately Hurt Low-Income Populations" 03/31/08
photo courtesy of Jeff Keen, used under this Creative Commons license

Missives From Massachusetts: Dogged By Paperwork

Time to take the pulse of health care reform in Massachusetts again as their universal health care plan is phased in. This time the Berkshire Eagle provides us with some views and interviews from the state's small businesses.

According to the state's new laws, every employer with eleven or more full time equivalent employees must offer a health plan or be fined. Small businesses in Massachusetts are grumbling about the additional workload caused by complex calculations and paperwork required to comply with state law.

Gary Kolbran, of Wheeler & Taylor Insurance was one of several people interviewed in the Eagle's article. He addresses, among other things, Section 125 plans that allow employees to set aside pretax money from their paychecks to pay for health expenses and insurance.

"All along, I feel like the government has made it extremely complicated," Kolbran said, as with the Section 125 plans, which he called an "elegant way to get part-timers to pay less for their health insurance, but they didn't think about the ramifications on small businesses. I'm sure General Electric has a (human resources) department that can handle this. A small business does not."

Although the state spent money marketing new health plans to people and informing them of the mandate, it did very little outreach to small businesses, leaving that task to trade associations and chambers of commerce.

The transition to the new systems is rocky at times, as unexpected ramifications come to light. One state program that has come to an end under the new reforms is having impact on many small businesses now that they can no longer use it to claim an insurance subsidy both as an owner and an employee of the same business.

In addition the Retailers Association of Massachusetts is pushing for the ability to purchase insurance in bulk for its members, something not currently provided for. Association President John Hurst calls the current situation discriminatory, creating a situation where premiums are far lower for big business than for small ones.

The road to universal health care would seem to be well paved, but you should still keep an eye out for potholes.

SOURCE: "Business owners pay the cost of health care
Paperwork, fees piling up" 12/10/07

photo courtesy of chrisscott, used under this Creative Commons license

Eight States to Sue Administration Over Child Health Care

As the time approaches for President Bush to veto the current SCHIP legislation, as he has repeatedly promised, the adversarial nature of the debate is turning litigious. Tom Hester at Newsday reports:

New Jersey on Monday joined seven states in filing separate lawsuits against the Bush administration's challenge of proposed federal rules the states say will force poor children to lose health coverage.

The lawsuit for New Jersey was filed Monday morning in federal court in Trenton, state Attorney General Anne Milgram said. New Jersey joins Maryland, Arizona, California, Illinois, New Hampshire, New York and Washington in filing similar litigation.

"The Bush administration has gone beyond its regulatory rights," New Jersey Gov. Jon S. Corzine said as he announced the lawsuit at an East Orange health center.

At the core of the conflict are rules issued by the Center for Medicare and Medicaid Services which the suits claim exceed the statutory authority set forth in Title XXI of the Social Security Act. The SCHIP legislation currently facing veto would remove these new strictures. What new strictures, you ask? Ralph Thomas at the Seattle Times brings us the following clarification:

Under the restrictions, before states can start enrolling kids above 250 percent of the poverty level, they must make sure they are covering at least 95 percent of kids at or below 200 percent of the poverty level.

[Washington State Governor] Gregoire said no state has been able to reach that mark. She said Washington has one of the nation's highest coverage rates, at about 91 percent.

"We just do not believe that is achievable and in fact was put in place to guarantee that we couldn't go above 250 percent of poverty," she said.

The restrictions also require new enrollees above 250 percent of the poverty level to go a year without insurance before they could enroll in SCHIP.

These strictures are being cast as beyond the legal limitations on federal power, and more states continue to bring suit agaisnt them.

"The federal government lacks the authority to do what it is trying to do," [NJ Attorney General] Milgram said, adding that New Jersey's plan has been approved eight times, including five times by the Bush administration.

[New Jersey Gov. Jon S.] Corzine has said the rules could risk health insurance coverage for 10,000 New Jersey poor children.

SOURCE: "8 States Sue Bush Over Children's Health Insurance" 10/01/07
SOURCE: "State to Sue Feds Over Childrens Health Insurance" 10/02/07
photo courtesy of Scott Ableman

Votes and Vetos: AB8 Passes

All eyes in California are focused on Sacramento.

From the San Francisco Chronicle:

The state Legislature approved an overhaul of California's health care system Monday, but even before the votes were tallied Gov. Arnold Schwarzenegger vowed to veto the bill and call lawmakers into a special session after the current session ends this week.

Schwarzenegger said he would reject AB8, by Speaker Fabian Núñez, D-Los Angeles, because it puts too great a financial burden on employers and does not address the needs of 2.8 million of California's estimated 6.8 million uninsured residents.

Despite the vote's outcome, there is still a long road ahead for reformers. Schwarzenegger's veto will bring a return to the ongoing debate, while the special session will keep it in the public eye.

Jordan Rau at the Los Angeles Times speculates on the content of possible resolutions:

An agreement would be likely to include a requirement that employers provide health coverage for workers or pay a fee to the state, which would then arrange for insurance for those workers. That proposal forms the heart of the Democratic bill.

The deal probably would also incorporate a tax on hospitals that would help California capture an extra $2 billion in federal aid. The California Hospital Assn. endorsed such a tax last week after Schwarzenegger lobbied hospital executives.

SOURCE: "Health Care Bill Passes Legislature, But Governor Says He'll Veto It" 09/11/07
SOURCE: "Governor Plans Health Care Veto, Talks" 09/11/07
photo courtesy of Fronco Folini on Flickr remixed and used under this Creative Commons license

Dissecting Mitt Romney's Health Care Plan

Mitt Romney, Republican presidential candidate and former Massachusetts Governor, unveiled his detailed health care reform plan this past Friday. Today, conservative magazine National Review Online published responses to Romney's plan from various health care experts.

Among those experts questioned is John Goodman, President and CEO of the National Center for Policy Analysis.

Goodman writes:

Mitt Romney is the only U.S. politician who can credibly claim to have created universal health care coverage. His Massachusetts Health Plan may yet falter; but so far he has walked the walk, while his Democrat opponents have only chattered. He alone owns the health care issue. [...] In taking the Massachusetts plan nationwide, Romney has left most of the bad features on the cutting room floor. There is no individual mandate, no employer mandate, and no managed competition. States would have the opportunity to go their own way.

SOURCE: "Dr. Romney Goes National" 08/27/07
photo courtesy of Cathy Kaplan

Wisconsin's State Plan

On the In These Times blog today, David Moberg writes about state legislation in Wisconsin regarding universal health care. Moberg quotes the Progressive States Network, which called the Healthy Wisconsin plan "the boldest and most comprehensive health care reform from any state." Writes Moberg, "It may become a model for other states or national universal health care."

Combining features of “single-payer” proposals that make a public plan the universal insurer with elements of market-oriented “managed competition” proposals, Healthy Wisconsin would cover virtually every state resident not insured under a public program, like Medicare. According to projections by the Lewin Group, a prominent health care consulting firm, it would also save individuals, employers and governments an estimated $13.8 billion on health insurance over the next decade.

Advocates believe that even if the plan doesn't pass this session, it has a strong chance of passing next year.

SOURCE: "Universal Health Care for Wisconsin?" 08/20/07
Wisconsin state capitol photo courtesy of Paul Wilczynski

Wisconsin's Universal Health Care Plan - Pros and Cons

The Wisconsin Senate recently attached a proposal to their budget bill that would create a $15 billion tax increase to fund universal health care within the state.

The proposal is being met with both criticism and praise. The Green Bay Press-Gazette ran two guest columns yesterday -- one in favor of the plan, and one against.

Joe Leean, a former state senator and chair of the planning committee for the new health care plan, writes in his guest column:

It is the largest tax increase in state history. Because the funding for the plan is assessed on payroll, it is collected as a tax. But the naysayers are neglecting to point out that the approximate $15 billion collected for this plan eliminates more than $15 billion currently paid by businesses and consumers in insurance premiums.

Bill G. Smith, state director of the National Federation of Independent Business/Wisconsin, writes in his article:

Now, we understand that when public policy decisions are made, there are compromises. However, this is a proposal seeking to fund health care with a new payroll tax on businesses regardless of their ability to pay, regardless of their profitability and regardless of employer and employee choice.

According to Leean, "Leaders of the Republican-controlled Assembly have stated there is no way this package will pass their house."

SOURCE: "Stop Trashing State Health-Care Plan and Take a Look At It" 07/22/07
SOURCE: "Health Plan Bad Medicine for State's Economy" 07/22/07
Wisconsin capitol photo courtesy of Steve Todey via Stock.Xchng

Massachusetts Governor Won't Use State Model for U.S.

On July 1 of this year, a universal health care plan for all state residents went into effect in Massachusetts. The plan was pushed through by governor -- and 2008 Presidential candidate -- Mitt Romney.

With an article in yesterday's Miami Herald, writer Steven Thomma ponders why Romney has not been talking about the Massachusetts model, or health care in general, in his campaign.

Aides say the Massachusetts plan wouldn't work nationally, and Romney has no plans to propose a nationwide version.

Romney spokesperson Kevin Madden says that the omission of the Massachusetts health care plan from TV ads is not intentional, and that Romney is discussing reform with voters in town hall meetings. According to Thomma, however, Romney doesn't want to apply the Massachusetts model to the country.

SOURCE: "Healthcare Success Proves Tricky for Romney" 07/15/07
Stock photo courtesy of GeekPhilosopher.com

State-Run vs. National

Today on the TPM Cafe blog, health care specialist Maggie Mahar argues against state-by-state health care reform.

The fight for national healthcare reform will be fierce. To stand up to the powerful national interests that oppose reform, reformers will need muscle. This is just one reason why the battle must take place at the national level. Incrementalism -- one state at a time -- is no answer.

Mahar cites other reasons, such as the U.S. having more clout than individual states in dealing with pharmaceutical and insurance companies, wealthier states helping the poorer states, and the low ratings that state-run Medicaid programs receive.

She also brings up the possibility that problems within state-run health care plans will reflect negatively on potential nationwide programs, and give opponents to national health care reform the ammunition to shoot the ideas down.

SOURCE: "Why We Can't Reform Healthcare One State At A Time" 07/13/07
Photo by Chance Agrella, courtesy of Free Range.

Economic Impact of California Reform

UC Berkeley News shares results of a report by university researchers about the economic impact of the two major statewide health care reform plans under consideration in California.

Their study concludes that neither plan will mean job losses in California, and it forecasts that most firms will experience little or no net change in business operating costs after a short adjustment period. Increased operating costs related to increased health care provisions are likely to be absorbed through increased productivity, modest price hikes for consumers and delayed wage increases for workers earning more than minimum wage, the report says.

The article summarizes findings in the report, "Health Coverage Proposals in California: Impact on Businesses." The report was authored by researchers at the University of California at Berkeley's Center for Labor Research and Education, and it analyzes Gov. Arnold Schwarzenegger's health care reform proposal and Assembly Bill 8 (AB 8).

The story also includes a link to the full report.

SOURCE: "Study Predicts Positive Net Economic Impacts of Key Health Reform Plans" 07/11/07