HEALTH CARE/Joan Retsinas

States Balance Budget on the Backs of Working Class

In The Budget Battle, brought to you in print and on line, the two sides square off. In one corner are states, facing years of bad decisions and bad luck. Cassandra has opened her box: unfunded pension liabilities, bills for employee health insurance, contracts cemented in crazy glue and a citizenry that turns rabid at the word “taxes.” In the other corner are public employees — threatened, beleaguered, calling on their national brothers-and-sisters-in-labor for back-up. Collective bargaining has won benefits that workers don’t want to lose; nor do workers want “furloughs,” “layoffs” or, even worse, “dismissals.”

This is the battle royal. Unlike their failing private sector counterparts, governments cannot close shop, move operations overseas, or fade into Chapter 11. The budget-cutters must cut, and they are looking to teachers, firefighters, police officers, bureaucrats.

States, though, are also taking aim at another set of victims: the poor. But because the poor have few national allies, because they cannot argue, like teachers et al, that they perform a vital function, and because they are so busy making do, the poor have not mounted a strong defense. These cuts gain media attention, but in the back of the newspaper, below the fold.

Fifty-three million people, most of them poor, rely on Medicaid for health insurance. Generally states pick up more than half the tab; poorer states pay less; wealthier states, more. States spend roughly 16% of their budgets for this insurance. Last year the federal government gave states an extra $26 billion, but there is no prospect for an additional infusion.

Medicaid is an alluring target. In a Wall Street Journal poll, when asked “Should states cut Medicaid?,” 70% of respondents said “yes.”

(“Governors scramble to rein in Medicaid,” Sara Murray, Janet Adamy, Neil King Jr, Wall Street Journal, 2/28/11) And states are following suit.

One choice: take aim at the 1% of people who gobble up 25% of the Medicaid budget: the people living in group homes or nursing homes. On the one hand, states cannot easily drop these residents from the rolls, for they have no place to go. They can’t afford group homes, or $200-a-day nursing care. On the other hand, these residents are unlikely to protest spending cuts. Gov. Chris Christie (R) promised the New Jersey legislature that, with “modern managed care,” he would save $41 billion. We’ll see how that rhetoric translates into numbers: Fewer staff per resident? Lower staff credentials? Fewer rehabilitation programs?

Optimistically, Ohio wants to shift people from nursing homes to less expensive settings — a laudable goal, but not easily accomplished. Cuts in reimbursement are easy, but every state reduction triggers a federal reduction. Texas and South Dakota have proposed cutting reimbursement to nursing homes by 10%, which might close some facilities.

As for the rest of the enrollees, mostly families with children, states want to pare those rolls. The federal government has set an income threshold for eligibility (roughly $11,500); generous states have gone higher. More than half the states now want to scale back.

But the newly passed national health reform legislation stipulated that states not slash their Medicaid rolls. So states are seeking waivers. The Department of Health and Human Services recently gave Arizona a green light to drop 245,000 adults who had been previously enrolled under a demonstration program.

Consider Maine, where one-quarter of the population relies on Medicaid. Its governor wants — from his perspective, needs — to cut that number. Another strategy is to slash the benefits package.

Again, the federal government has set a minimum; states can gravitate down. And states propose to do just that. The code word is “flexibility,” followed by more code words: “coordination,” “best practices,” “efficiency.” Some of that flexibility will surely mean cuts.

A few states are re-thinking vision and dental care services. Fifty years ago poor people routinely had rotten teeth, diseased gums — we may return to those good old days. South Carolina proposed eliminating hospice, but backed off. It wants to drop circumcisions. Arizona wants to drop some organ transplants. Nevada wants to cut the number of diapers for incontinent adults from 300 a month to 186.

States have considered dropping prescription drugs for adults, or raising co-payments. The savings will not turn the states’ red ink into black, but states are desperate. Unfortunately for the poor, states are likely to prevail.

Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email retsinas@verizon.net.

From The Progressive Populist, April 15, 2011