Lawmakers Try To Minimize Budget Damage

As The Healthcare News goes to press this month, state lawmakers are launching a set of recommendations to directly counter much of what Gov. Mitt Romney’s has proposed in his budget .

Whether they will be successful remains to be seen, but the difference between the House Ways and Means Committee plan and Romney’s own goals is dramatic.
It seems, as our budget story this month suggests, that legislators are not only listening to the cries of hospital administrators and other care providers, but they’re trying to do something about the issues raised. Among the changes the House committee wants to enact in Romney’s budget:

• Restoring $70 million in proposed cuts to hospitals, including a cutback that would deny Medicaid payments to hospitals for primary care;
• Increasing funding by $14 million to Prescription Advantage, the state’s drug-discount program for senior citizens, as well as eliminating the increased co-payments backed by the governor; and
• Boosting state payments to the uncompensated care pool by $65 million over what Romney proposes, and providing a small increase in free-care payments to community health centers.

The additional money for Medicaid and free care would come from the state’s rainy-day fund and last year’s $500 million federal Medicaid bailout. And the House budget tweaks Romney’s plans in other ways, such as restoring $12 million in funding for public-school nurses.

Let’s be frank. Even if the state manages to pass a health care budget much closer to the House version than the governor’s version, it wouldn’t be much of an improvement over the current situation — and medical institutions would still be treading water.

For instance, the Mass. Hospital Assoc. (MHA) estimates that, under the current budget, hospitals will provide $222 million in free care in 2004 and 2005 that will not be reimbursed by the state.

And with Medicaid reimbursement for services provided now averaging just 70 cents on the dollar — which Romney aims to reduce to around 62 cents in his fiscal year 2005 budget — hospitals already have trouble staying in the black, and the uncompensated care situation is another major strain.

In a recent report on the state of hospital finances, the MHA issued a number of other, equally dire findings:

• Hospitals showed a 29{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} increase in uncompensated care costs and a 34{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} increase in the number of free care applications in the first quarter of hospital fiscal year 2004, as compared to the same period in 2003;
• Since August 2002, the state’s Medicaid program, MassHealth, reduced coverage by nearly 70,000 members, and the number of uninsured Massachusetts residents — many of whom will require free care — is estimated to be in excess of 600,000; and
• MHA-surveyed hospitals said the governor’s MassHealth hospital payment reductions will have an industry impact of about $160 million, and well over half of the proposed 2005 MassHealth cuts are directed at hospitals, which represent only 17{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of the MassHealth budget.

This is not a situation that can stand much more strain. At this point, hospital administrators — and legislators who worry about the impact of these numbers — are hoping mainly to keep the status quo and, at worst, put off the issue for another year. Romney’s plans just pour fuel on the fire.

To be fair, the governor is trying to come up with ways to get patients to use community health centers when they don’t specifically need hospital care. But even here, the House is being more creative, coming up with a plan to offer low-income residents a $5 incentive to seek basic care at such facilities, as well as funding a pilot program to encourage disabled Medicaid recipients to use community health centers.

The state’s ongoing budget crisis requires hard decisions, yes, but it also requires a measure of flexible thinking. Hospitals certainly do not benefit from the slash-and-burn approach Romney favors — many of them simply can’t afford to bear a heavier load.

There’s a better way, and the path suggested by the House Ways and Means Committee, although not a permanent solution, is at least a start.