What Government Giveth, it Can Taketh

Published February 1, 2002

As work begins in the 2002 sessions, state legislators will have their hands full with two major issues: budgets awash in red ink, and homeland security issues related to the events of September 11, 2001.

Much of the health care debate will shift from state capitols to the nation’s capitol. We should find it easier to keep an eye on the rascals in Washington than trying to keep up with 50 state legislatures. Rest assured, Health Care News will stay tuned-in and tuned-up for 2002.

If any significant legislation is to occur on patients’ rights, Medicare and Medicaid reform, prescription drug discounts, and the uninsured, it will have to come from Washington. And even then, it could be all talk and no action.

Tight budgets at the state level are forcing some legislators to swallow hard and admit previous liberal fiscal policies on health care-related matters are wreaking havoc with state budgets. What state governments have given liberally, they now will take back, without apology. Some states residents are feeling a further pain in the wallet called income tax increases.

And, in the “I hate to say it, but I told you so,” department, almost every state will be forced to revise, cut, or trim their budgets and tap into tobacco settlement funds to fill in general revenue gaps. A smaller and smaller share of that pie is going toward the health care-related issues that just a two years ago “desperately needed funding.” Such a surprise.

Budget Hemorrhage

Some 35 states are reporting they expect budget shortfalls this year. Among them:

  • California, which is $12 billion short of sliding into the Pacific Ocean;
  • New York, $3 billion short … before September 11;
  • New Jersey, $1.9 billion;
  • Virginia, $1.3 billion;
  • Wisconsin, also at $1.3 billion;
  • Indiana, $1 billion;
  • Minnesota, also roughly a billion off the mark;
  • Washington state, $800 million;
  • Kentucky, $533 million; and
  • Missouri, $324 million off (after reallocating 2002 tobacco funds).

Only 10 states have not reported shortfalls. Let’s hear it for Alaska, Louisiana, Montana, Nevada, New Mexico, North Dakota, Oklahoma, Pennsylvania, Texas, and Wyoming. Possible shortfalls may yet be reported in Hawaii, North Carolina, and West Virginia.

“Ask Not What Government Can Do for You …”

Hospitals and nursing facilities expect to see millions more dollars in operating losses through 2002 due to decreased Medicare and Medicaid reimbursements.

Governors around the country, struggling with bloated health care entitlements dished out during the last few years, now find it necessary to break faith and cut back public programs or severely ration services.

The economy, even if on the comeback trail, will not turn around fast enough to accommodate thousands of new Medicaid enrollees in states that have liberalized eligibility standards to include a family of three earning $50,000 a year.

Early last year, the American Public Human Service Association asked state Medicaid officials to report their projected budget increases for the fiscal year. Results were alarming: a 20 percent jump in Washington, 17 percent in Mississippi, 16 percent in Nebraska, 15 percent in North Dakota … you get the idea.

And too, it’s a critical time for nurses in the health care industry because of the projected shortage of professional nurses. Many hospitals are closing nursing units and downsizing staff in order to stay afloat.

“… Ask What You Can Do for Government”

Finally, the industry will soon be faced with a population demanding even more services. The bulk of working adults aged 30 to 50 are moving into the over-60 category. and right behind them are the young adults just starting families. While today’s population has generally been defined by a relatively predictable level of health care needs, tomorrow’s population with have needs that are much less predictable … except we know they’ll be greater.

By 2011, the first of the baby boomers will turn 65. If we think the pressure on the health care industry is heavy now, just wait. As the population ages and people begin to have more ailments, it’s not a time to be thinking about rationing services.

It is, instead, a time past-due for state and federal legislators to rely on the stability of financing health plans like Medicare and Medicaid with private-sector insurance—not more government entitlement programs that trap people into government largesse and wreak havoc on state budgets.

It is also high time we looked at financing long-term care needs through private-sector long-term care insurance … not Medicare, reformed or otherwise.