State health care access may get worse before it gets better

As the House prepares to hold hearings on the state’s health budget next week, the state’s hospitals are warning that under funding of Michigan’s Medicaid program is causing a breakdown in the safety net.

A record one in six Michigan residents are now covered by Medicaid, but the program reimburses doctors and hospitals at rates far lower than private insurance, and health care providers are reducing services to Medicaid recipients and even closing down sections of their hospitals as they struggle with the burden of uncompensated care.

Health care providers are lobbying against an extension of last year’s 8 percent cut in reimbursement for services for Medicaid clients.

However, lawmakers from both parties agree that there is no additional money available for the program without raising new revenue and Republicans are refusing any new taxes and recommending deep new cuts for the program.

Last month the Republican-controlled state Senate passed a budget for the Dept. of Community Health that cuts about $10 million from the program by eliminating “optional” services such as prescription drug coverage, hospice care, home health care, physical therapy, coverage for 19 and 20 year olds and by adding a four percent cut in Medicaid reimbursement rates for some physician services.

Medicaid is a joint state/federal program and the state has broad authority to set its own guidelines about services and reimbursement rates. The federal government matches each dollar spent by the state with about three dollars, so Michigan has to spend money in order to receive money.

“This puts the state in a catch 22,” said Gary McDowell (D-Rudyard), chair of the House Appropriations Committee on Community Health. “The Medicaid caseload has almost doubled, and we have to put up the first dollar for services.”

“As we reduce reimbursements, we are losing providers, and this is creating access problems for people across the whole state. When people don’t have health care they end up in emergency rooms and this is a very ineffective and costly way to deliver care. “

“The decision that health care is a right was made back when it was decided that an emergency room cannot deny you care,” McDowell said. “Even if you feel that it’s not right to pay for health care for the needy, you’ve got to realize that you are paying for it now.”

Even as federal health care reform promises to dramatically expand access to health care in the next few years, in the short term things are likely to get worse for Michigan, McDowell said.

“I don’t see any additional revenue, and without additional revenue there are going to be cuts. There is no other way of doing it at the state level.”

“We are cutting almost all of our preventative medicine.”

McDowell said that at a recent committee hearing, adult hemophiliacs and children with special medical needs seemed pitted against each other as they begged lawmakers not to cut funding for the programs that they use.

“That is where we’ve come to as a state,” he said. “These are the type of decisions we will have to make.”

Jan Hudson, planning and research analyst with the Michigan League for Human Services, called the continuing cuts to Medicaid, “penny wise and pound foolish.”

Michigan stands to lose huge amounts of federal dollars by pulling state funds out of the program, Hudson said, because of every hundred dollars we spent on Medicaid in Michigan, 75 dollars of it comes from the federal government.

“The four percent cut to physician reimbursement rates passed by the Senate will save $3.4 million in state dollars but will eliminate $12.7 in funding for physician services.”

“Health care needs do not diminish because the Legislature decides to cut funding,” she said, “they generally only escalate when they are not addressed. In the end rather than saving money, these cuts will cause costs to escalate.”

“A person who does not get treatment for a cold can end up in a hospital with pneumonia.”

“When people say that we can’t do anything about this, they are making a choice,” Hudson said. “The state has options for coming up with more money to pay for these services.”

A sales tax on services is among the options for lawmakers that want to find funding for health care, Hudson said, other strategies could involve implementing a graduated income tax and reviewing tax credits to make sure that they are meeting the public policy goals for which they were intended.

Democrats control the House and it’s not certain that the new rate cuts and cuts to eligibility sought by Republicans will be enacted.

“We should be clear that the Governor’s budget proposed neither of these reductions and the administration is opposed to the actions taken by the Senate to cut rates and eligibility,” said James McCurtis, spokesman for the Dept. of Community Health.

Some of the proposed cuts may be illegal, according to James McCurtis, spokesman for Dept. of Community Health.

The elimination of Medicaid eligibility for 19 and 20 year olds would cause over 25,000 individuals to lose coverage, he said.

“Both the [American Recovery and Reinvestment Act] and the new Health Care Reform bill require states to maintain current eligibility policies,“ he said. “So we believe that the eligibility reductions proposed by the Senate are prohibited by law.”

Hudson said that there is money to be had if only there was the political will to raise it. “When people say that we can’t do anything about this, they are making a choice.”