On Health Care, Govs Are Tightening Belts

“ Our success depends on the stability and reliability of the commitments the federal government has made to us. Any retreat in those commitments could have devastating effects on our progress” Gov. Deval Patrick (D), Massachusetts

While more than a dozen governors hold out hope for getting universal health insurance for either adults or children, many governors this year are increasingly struggling to keep just their current health programs afloat.

States don’t have much money in the bank to pay for ambitious health proposals. A stingy federal government and a souring economy – with its loss of jobs and tax revenue – mean less money flowing in. But at the same time, more people are lining up for public services, like health insurance, as they lose their jobs or earn less money.

This current climate makes it more difficult for states to follow the lead of Massachusetts, which last year became the first to require nearly all residents to get health coverage.

Even before the economy slumped, governors in California, Illinois and Pennsylvania couldn’t get major universal coverage measures through their legislatures last year. They all vowed early this year to press the issue again.

 “Now, I understand the concern that we have now a deficit, and that our plan is maybe too daring, or too bold, or expensive. But sometimes you have to be daring, because the need is so great,” California Gov. Arnold Schwarzenegger (R) told legislators in his annual state of the state address Jan. 8.

New Mexico has the second-highest uninsured rate in the country, trailing only

Texas. But Gov. Bill Richardson (D) set his sights on achieving universal coverage by the time his successor is elected in 2010.

“The time for universal health care is now,” he said at the kick-off of the New Mexico Legislature’s 30-day session. But lawmakers failed to adopt Richardson’s plan by the time they adjourned in February.

“ Even during the prior recession when other states were making massive cuts in the number of people receiving Medicaid, we have never dropped any of Delaware’s neediest residents from our Medicaid rolls” Gov. Ruth Minner (D), Delaware

Colorado Gov. Bill Ritter (D) has called for an expansion that would allow 17,000 more children to get health care, while Iowa Gov. Chet Culver (D) announced plans to cover another 7,500. 

“Why shouldn’t every Iowan get the same type of insurance coverage that elected officials get? Well, that’s my goal,” Culver said in his state of the state address .

But the weak economy and Bush administration curbs on federal health spending are making health coverage expansions difficult.

Massachusetts Gov. Deval Patrick (D) said he is worried that new federal policies could undermine the state’s effort to become the first to establish universal health coverage.

“Our success depends on the stability and reliability of the commitments the federal government has made to us. Any retreat in those commitments could have devastating effects on our progress,” Patrick told a U.S. House panel on Feb. 26.

Drying up federal resources stopped South Dakota’s governor from trying to make more families eligible for the State Children’s Health Insurance Program.

“We don’t have the federal resources,” Gov. Michael Rounds (R) told the South Dakota Legislature during his state of the state speech Jan. 8.

A series of regulatory changes by the Bush administration is restricting how much money the federal government will spend for Medicaid and SCHIP. Administration officials say the tighter rules will ensure that federal money is better directed toward health-related services.

Changes for Medicaid, which covers 59 million poor Americans, will take a bite out of state Medicaid budgets. The administration estimates states will lose $15 billion over the next five years; congressional Democrats, relying on estimates by state Medicaid agencies, say the hit would be closer to $49.7 billion.

The administration is also trying to control spending on SCHIP, which provides subsidized health coverage for working families who make too much to qualify for Medicaid. The administration’s aim is to make sure states are insuring the vast majority of lower-income kids before they offer public benefits to better-off families.

Well before he resigned, New York Gov. Eliot Spitzer (D) blasted the Bush administration for blocking the Empire State from offering SCHIP coverage to families making up to four times the federal poverty level.

“The administration may feel that a family with two working parents who each earn $40,000 is so wealthy that they should be all on their own when it comes to covering kids, but I, for one, do not. ‘No’ is the one thing we’re not going to take for an answer,” he said during his state of the state speech Jan. 9.

Spitzer, who steps down Monday (March 17) in the wake of a sex scandal, suggested to lawmakers that New York pay for the entire cost of the expansion if the federal government doesn’t.

On Capitol Hill last month, Ohio Gov. Ted Strickland (D) said he’s still weighing options – including a lawsuit – for how to respond to the administration’s denial of an Ohio expansion plan.

Strickland said he and his lawyers met with Health and Human Services Secretary Michael Leavitt, a former governor of Utah, to try to determine the legal basis for the denial but still believed the administration had no authority to deny it.

While states cope with fewer federal dollars, their own revenues are slowing, too.

According to the National Governors Association, 18 states must cut a total of $14 billion to keep this year’s budgets in balance, and 18 states already know they’re running a total of billion short in the upcoming fiscal year.

If the current downturn follows the path of previous recessions, 35 to 40 states could face budget cuts in 2009, NGA Executive Director Raymond Scheppach said in a Jan. 28 column for Stateline.org.

The governors of Michigan and Delaware noted during their state of the state speeches that, during previous financial crises, they balanced the budgets without cutting people off of their public-health programs.

“Even during the prior recession when other states were making massive cuts in the number of people receiving Medicaid, we have never dropped any of Delaware’s neediest residents from our Medicaid rolls,” said Delaware Gov. Ruth Ann Minner (D). She said Delaware should do the same this time as well. 

But Mississippi Gov. Haley Barbour (R) warned that the federal cuts would finally hit home this year, after filling shortfalls in the Medicaid budget with one-time revenue allocations in the last two years.

He asked legislators in his state of the state address for a new hospital tax, which would also help net $275 million in new matching federal funds. “To fill the rest of the Medicaid hole, we will have to make some savings, and my budget will reflect that,” he said.

Diminishing funds could delay Maryland’s plans, approved last fall, to offer Medicaid benefits to 30,000 parents. The plan would allow parents in a family of four to enroll if they together made less than $24,400, instead of the current cut-off of $6,200. Lawmakers said delaying the expansion is one way of coping with the state’s budget troubles, after meeting with Gov. Martin O’Malley (D).

Besides health insurance, governors are looking at less controversial, and less costly, health measures. In their state of the state addresses, they backed programs to train more nurses, make state employees healthier, detect diseases, fight autism, combat childhood obesity and allow seniors to get medical care at home.