Kaiser Daily Health Policy Report Examines Recent Action on States’ Health Budgets

The following summarizes recent news on state budget proposals.

• Illinois: Gov. George Ryan (R) on Feb. 20 announced a $52.8 billion fiscal year 2003 budget proposal that would cut Medicaid provider reimbursements and close a mental health center (O'Connor, AP/Chicago Tribune, 2/20). Following cuts made in Medicaid spending over the last few months, Ryan's latest proposal calls for $756 million in additional cuts that would reduce payments to doctors, dentists, pharmacists and nursing homes participating in Medicaid (McDermott/Powers, St. Louis Post Dispatch, 2/20). The budget plan also would use the state's tobacco settlement or federal funds on additional health benefits for seniors and aid in purchasing prescription drugs. The AP/Tribune does not provide further details on those initiatives (AP/Chicago Tribune, 2/20).
• Indiana: Gov. Frank O'Bannon (D) on Feb. 18 announced $6.5 million in cuts to the state's CHOICE program, which provides home health care to the elderly. That decrease is part of overall cuts of $109 million O'Bannon made to cover the state's $1.3 billion budget shortfall. O'Bannon previously had announced a $250 million cut from the state's Medicaid program, which has grown by 48% over the past six years. Further cuts to Medicaid are possible, as O'Bannon has said that in coming months he will trim an additional $203 million from the overall state budget in order to reach total cuts of $782 million. The cuts announced Feb. 18 take effect July 1 ( Indianapolis Star, 2/19).
• New Jersey: Gov. James McGreevey (D) on Feb. 11 released a proposal that would impose "deep cuts" in health care spending to counter a $2.9 billion state budget shortfall this year. The budget plan calls for cutting $22.5 million in Medicaid reimbursements to providers. In addition, the deficit reduction plan would use $740 million from last year's budget surplus; $327 million by "skipping" payments to health and retirement funds for state employees; $50 million from the Disabilities Fund; $30 million allocated but not yet spent by the Senior Gold program, which helps cover the cost of seniors' health care; and $11 million from the Medical Malpractice Recovery fund (Kocieniewski, New York Times, 2/12).
• Pennsylvania: Gov. Mark Schweiker's (R) budget plan for the next fiscal year would close a loophole in the state's Medicaid law, which would drop about 7,500 people from the program and save the state about $10 million. Currently, all children with disabilities are allowed to receive benefits through the state's Medicaid program, called Medical Assistance, regardless of family income. But under Schweiker's proposal, the state would allow children with disabilities to receive Medicaid benefits only if their annual family incomes do not exceed $100,000 for a family of four (Snowbeck, Pittsburgh Post-Gazette, 2/11).
• Virginia: The state House and Senate last week each released budget plans for the next fiscal year that although "starkly different," signal that the state is poised to "constric[t]" government services. Concerning health care, mental health programs and community-based services would lose about $25 million under "any scenario." The state Senate budget plan is "more generous" than the state House plan concerning services to those with mental illnesses (Melton, Washington Post, 2/17). The Senate plan would restore cuts proposed by former Gov. Jim Gilmore (R) to community-based care programs for the mentally disabled. The House plan also would restore mental health funding cuts proposed by Gilmore, including $19 million for "troubled youths" and $17 million for community-based treatment programs. In addition, the House budget earmarks $2 million that would cover a shortfall in a prescription drug fund for the mentally disabled (Hardy/Schapiro, Richmond Times-Dispatch, 2/18).
• Wisconsin: Gov. Scott McCallum's (R) proposed budget plan for fiscal year 2003 would eliminate funding for 14 community health centers that provide care for low-income and uninsured people. The clinics have received funding from the state only for the past three years, and McCallum's budget proposal would cut $3 million in state support next year, leaving the centers reliant on federal support alone. However, community center officials maintain that federal aid is not guaranteed (Wyatt, AP/St. Paul Pioneer Press, 2/19).