Cutting Health Care Costs at Gunpoint

by Tim Foley

categories: Medicare and Medicaid, State and Local Efforts, The Uninsured and Underinsured

Published July 22, 2009 @ 07:21PM PT

Much has been made this week of whether or not we’re “rushing” by enacting health care reform along the lines of what President Obama first proposed in May of 2007.  All indications are that health care legislation won’t be passed out of both the House and the Senate by the time of the August recess.  The impression you get is though we had all the time of the world.  In addition to the real-time impact on families and businesses, state governments also don’t have time to wait.  Since they’re required to balance the state budget, and health care is either #1 or #2 in terms of percentage of state spending, they have no choice but to deal with skyrocketing costs, figuratively, at gunpoint.

Of course, how they do so is as idiosyncratic as the states themselves.  Some look upon their budget situation as crisis – others as opportunity.

California, of course, is pure crisis – and it’s a terrifying crisis at that.  As fellow Change.org’er Leigh Graham wrote on Poverty in America, “The more I read, the worse it gets.”  Already in July, enrollees on Medi-Cal lost a chunk of their benefits entirely, including dental, optical, mental health (psychology) and speech therapy.  It’s not that those on Medicaid will cease needing eyeglasses, therapy or care for gum infections – they’ll just have to go without.  Healthy Families, the California CHIP program, froze its enrollment to low-income children about a week in advance of the budget deal.  Schwarzenegger had threatened to discontinue the program altogether, making California the only state in the union not to have a coverage program for low-income children outside of Medicaid.  In the end, the program was spared, though the $144 million cut to the program guarantees not just that 350,000 children will be placed on a waiting list, but that some already on the program will likely have to be kicked out -- possibly as many as 250,000.

California is an extreme example, but the behavior is not extreme.  Most state legislatures and governors react to lean times by cutting benefits, trimming programs, and lowering eligibility.  Gov. Schwarzenegger’s actions seem shocking, but they’re not too far removed from Gov. Breseden in Tennessee reacted to a previous budget crisis by “rolling back” Medicaid eligibility for 100,000 people.  And it’s not just Medicaid.  Massachusetts, finding it could not afford the full costs of its subsidized Commonwealth Care program which enables low-income residents to buy insurance, will yank coverage from 30,000 legal immigrants – those who are in this country legally, played by their rules, have their papers and did everything right.  They just can’t afford to pay 25% or more of their income on insurance.

The news isn’t all bad, of course.  As mentioned, Massachusetts is using the current economic situation to finally do something about skyrocketing costs by moving away from fee-for-service and towards a payment system that rewards quality over quantity.  While California is cutting health coverage for children that will likely kick 250,000 off the program, 13 states recognize that the safety net provided by CHIP programs is more important than ever and have increased eligibility by an aggregate 250,000.  And the Sustinet program in Connecticut, despite being vetoed by Gov. Rell for the second year in a row, finally broke through when the Connecticut Legislature overrode the veto.  Universal, affordable coverage through a state-level government option that operates on the cost-effective medical home model could be alive and kicking in Connecticut by 2012.

It’s possible some of these breakthroughs would have happened without an economic crisis.  But certainly a powerful impetus came from the immediacy of need for more and more citizens, combined with the need from the states to get more bang for their health care buck.  While legislators at the federal level complain about the haste of a summer time line, the possibility of making a tough vote isn't real pressure.  Real pressure is working at the state level, having no options to delay, and being forced to fix a problem that's national in scope.

(Photo credit:  Thomas Hawk on Flickr.)