States Turning to Health Care to Ease Budget Crunch

State governments across the country are responding to deepening budget holes by pulling back on planned spending. With health care costs claiming an increasing share of state spending, as WashACE pointed out in this recent report, health care programs inevitably come under deeper scrutiny during lean times. The Christian Science Monitor reports on some of the proposals. While the story takes a dim view of the cuts, it does a pretty good job of laying out why they're being considered.

Facing budget deficits, two of the nation's most populous states, California and New York, are proposing changes in Medicaid that could affect the eligibility of hundreds of thousands of people or decrease funding for hospitals, doctors, dentists, and pharmacists.                 

Last month, California cut reimbursements to providers by 10 percent...       

Other states are tacking on fees or cutting funds for charity care in hospitals.

On the other coast, the effects are similarly dramatic.

In New York's situation, Gov. David Paterson, facing a growing budget deficit, has proposed freezing Medicaid reimbursement          rates for hospitals for the rest of 2008 and for 2009. Normally, the state factors in inflation.       

In addition, Mr. Paterson wants to cut reimbursement rates by an additional 7.2 percent for the next two years and impose a new tax on hospital revenues.

Controlling health care costs has never been easy. So it's encouraging to read pieces like this editorial in today's Herald of Everett.

The Everett Clinic, long a leader in finding ways to improve the quality and efficient delivery of care [is]  showing exciting results in improving care and reducing costs for Medicare patients as part of a national demonstration project coordinated by the government. The Everett Clinic's efforts, which combine its use of electronic patient records with a highly coordinated, hands-on approach by its care providers, have resulted in impressive, measurable improvements in the quality of care for diabetes, coronary artery disease and congestive heart failure -- conditions often seen in senior patients. In addition to quality improvements, the clinic saved Medicare nearly $1.6 million last year, the second year of the four-year project.

Elsewhere,  budget woes are giving state employees in Georgia an unpaid day off a month and dominating electoral politics in Minnesota.

Finally, Peter Navarro, a UC Irvine economist and business professor, explains how the California budget crisis could tip the nation into recession.