Stateline Story

State Health Programs Largely Spared In Budget-Cutting

  • June 27, 2001
  • By Mary Guiden

State budgets are tight this year, but most health programs have escaped cutbacks. Arizona has agreed to hefty increases for the mentally ill, Oregon is considering a new voluntary screening program for newborns and Maine just okayed a small cigarette tax increase to expand health insurance for adults without kids.

Healthcare programs are getting priority even though the costs of Medicaid--a federal and state health insurance program for 36 million kids, elderly and disabled people- are exploding, according to a study from the National Governors Association (NGA) and the National Association of State Budget Officers (NASBO).

Fully two-thirds of states estimate that current Medicaid spending will exceed what's been budgeted, researchers say.

Among additional findings:

  • The Medicaid budget growth rate for fiscal 2001 is estimated to be 9.9 percent; in fiscal 2002 it is projected to be 7.7 percent.
  • The growth rate for prescription drugs, which represent the third largest expenditure of the Medicaid budget, is around 18 percent annually.
  • Factors that play into Medicaid growth are the cost of medical services, most notably from prescription drugs.
  • States have seen big increases in the enrollment of kids in Medicaid due to extensive ad campaigns for the State Children's Health Insurance Program(SCHIP).

Despite the grim news, state health policy experts are upbeat about what they're seeing so far. "The general trend, in spite of the fact that half of the states had to go in for Medicaid supplemental money to cover existing and new programs is that we have not seen a lot of cuts. Some states have even added benefits and expanded programs," says Joan Henneberry, director of NGA's Health Policy Studies Division.

Georgia is one state where state officials early on showed some caution, but things are now loosening up a bit. An across-the-board state government hiring freeze is easing up and in general the economy in the Peachtree state is better than in other places, says Martin Smith, spokesperson for the Georgia Department of Community Health, which oversees Medicaid programs.

A majority of health programs approved by the state's General Assembly are also moving forward, he says. Georgia approved Medicaid rate increases for doctors, nursing home workers and pediatricians who provide newborn baby visits in the hospital. The state also plans to cover health insurance for people who have cystic fibrosis and will conduct surveys on how much it would cost to expand Medicaid for around 600 physically disabled working people who can't get insurance through their job. "There's plenty of stuff getting funded," says Smith. Out West, Arizona lawmakers express similar opinions. "Everyone's been panic-stricken about the budget. We had increases over last year but they weren't as big as we anticipated," says Senate Health Committee Chairperson Sue Gerard.

Arizona beefed up programs for the seriously mentally ill by around $200 million, expanded Medicaid for uninsured adults via tobacco settlement money and created a small prescription drug program for seniors who live in rural areas.

"In health care, we've had a phenomenal year, mainly because of a citizen's initiative on use of tobacco settlement money for health programs known as Proposition 200," Gerard says.

Elsewhere, legislators are tightening government purse strings despite good economic times. Idaho has stopped aggressively promoting health programs that legislators say have grown too costly. Lawmakers this session okayed provisions that put a stop to advertising health programs as of July 1 to cut back on future costs.

"Year-to-date revenues are still up a bit, but they're down by $20 million from last year. The economy is cooling and we need to be cautious. We have had tremendous growth in Medicaid and SCHIP. We put $200 million more in Medicaid over the last year than what we appropriated a year ago ... and we're trying to make sure money is available for kids that are already in the program. There's no sense in doing extra outreach if we haven't got enough money for the program," says Senate Finance Chairman Dean Cameron. Cameron and fellow lawmakers plan to meet with Idaho Department of Health and Welfare reps early in July to hash out what ad campaigns will be cut and which ones will remain in place.

Department spokesperson Bill Walker says things like the state's childhood immunization program--championed by Gov. Dirk Kempthorne--won't be affected by new limits. "We still have a ways to go in determining things like whether or not a brochure falls under the new provision. My best guess is the vast majority of things we're currently doing we'll continue to do," he says.

Tags: Health