That safety net that our leaders are always holding out for the needy keeps getting new holes in it. After years of economic expansion that fueled an unprecedented growth in federal and state spending and led to massive tax cuts at both levels, this year's sharp revenue slump has federal and state governments panicking and looking for quick and easy solutions. And the Medicaid program seems to have drawn the short straw.
This isn't surprising. The cost of providing healthcare and long-term-care coverage to about 4 million Medicaid beneficiaries now amounts to about $260 billion, up from $184 billion in 1998. It's the second-largest program in state budgets, but unlike No. 1, education, it lacks a constituency of soccer moms and Little League dads who vote. And let's face it, governors and legislators don't play golf with or accept free vacations from people on cash assistance, poor children or the low-income elderly.
Of course, hospitals and doctors are going to be hurt by further cuts in a program that unlike Medicare doesn't cover the basic costs of providing services, but governors and President Bush figure providers probably won't whine much louder if they cut further.
The federal government picks up more than half of the cost of this matching program, and the president already has targeted it for a $9 billion reduction next year, most of that coming from reduced payments to public hospitals. In particular, Bush is going through with the planned closing of a loophole that allows states to pay some hospitals and nursing homes 150% of the normal payment limit to help them cover their higher costs of treating the indigent. The president calls this curbing "abusive practices." Of course, fully funding military programs such as the crash-prone Osprey helicopter that almost nobody but defense contractors wants is not an abuse. Maybe providers can find a way to rename Medicaid the Homeland Medical Defense Program.
Not everybody shares the administration's view. Even the president's own brother, Florida Gov. Jeb Bush, has protested cutting the federal share of Medicaid.
Nevertheless, political response to the crisis has been tepid. A Democratic-led effort in Congress to expand the federal share of the program to help states cope with rising unemployment fell victim to partisan politics in the debate over an economic stimulus package.
That left the states facing a combined $15 billion projected deficit in the program next year. Now, they are busy readying cuts to the safety net. The National Conference of State Legislatures says that 30 states are weighing "program changes" to their Medicaid programs for fiscal 2003. That translates to cuts, I think.
The impact on providers is obvious. In Illinois, Gov. George Ryan has announced cuts of $756 million in the program, with more than $200 million coming out of hospital payments. As just one small example of this impact, Loyola University Health System in Maywood, Ill., a Chicago suburb, says it will lose $10 million in fiscal 2003 from the state Medicaid cuts.
In New Mexico, Gov. Gary Johnson has proposed Medicaid cuts that will result in a loss of $46 million at University of New Mexico Hospital, Albuquerque, which would force the closure of its Level I trauma center-the only such facility in the state-and the grounding of its valuable air ambulance service, according to hospital Chief Executive Officer Steve McKernan.
The nation's governors on Feb. 24 demanded that Congress and President Bush take immediate action to slow the explosive growth of Medicaid, including proposals to have certain beneficiaries pick up a greater share of the cost and to expand Medicare coverage of home care, which would reduce state costs for home healthcare services provided under Medicaid.
What would be better would be our government leaders deciding that when economic times get harder, that is when our priorities must shift to taking care of those who can't help themselves.