Kaiser Daily Health Policy Report Highlights State Budget Developments

Summaries of news about health care developments related to the state budgets in California, Colorado, Kansas, Maryland, New York, Virginia and Wisconsin appear below.

• California: Gov. Arnold Schwarzenegger (R) on Friday plans to sign a package of legislation that aims to address California's estimated $42-billion budget deficit through June 2010, the Los Angeles Times reports (Rau et al., Los Angeles Times, 2/20). The package includes $14.9 billion in spending cuts, $12.8 billion in tax increases and $11.4 billion in borrowing (Zapler/Garcia, San Jose Mercury News, 2/19). Funding for health and human services programs would be reduced by about $1.6 billion, but federal funds included in the economic stimulus package could restore $676 million in cuts, according to the San Francisco Chronicle (Fernandez, San Francisco Chronicle, 2/20). The package also would cut $24.7 million in state payments to counties for administering applications for Medi-Cal, the state's Medicaid program (Kisken, Ventura County Star, 2/20). In addition, the package could eliminate coverage of acupuncture, audiology and speech therapy, chiropractic care, dental care, optometry and optician services, podiatry and psychological services for about three million adult Medi-Cal beneficiaries. The budget package relies largely on voters' approval of $5.8 billion in initiatives outlined in ballot proposals that will be considered in a May 19 special election (Los Angeles Times, 2/20). One of the health care-related proposals would shift $227 million in funding over two years from new Proposition 63 mental health programs to fund the existing Early Periodic Screening, Diagnosis and Treatment Program for low-income children. Another initiative would reallocate $608 million over five years from First 5 early childhood health care and education programs to other children's programs (AP/San Jose Mercury News, 2/19). Advocates for mental health and early childhood education are preparing campaigns to oppose the initiatives (Los Angeles Times, 2/20). Other measures on the ballot will address borrowing against state lottery proceeds, state education funding and a state spending cap (San Francisco Chronicle, 2/20). The deficit could re-emerge if voters reject any of the measures qualified as part of the budget package (Los Angeles Times, 2/20). State officials said the deficit could grow larger depending on the overall economy (Sanders, Sacramento Bee, 2/20). The governor said he would start campaigning for the measures soon (Miller, Riverside Press-Enterprise, 2/19).
  
  
• Colorado: The state Senate on Wednesday reversed some proposed budget cuts in light of an expected $85 million in additional Medicaid funding that the state will receive from the federal economic stimulus package, the AP/Examiner reports. Senators reversed recommended cuts to physician Medicaid reimbursements, as well as cuts and transfers to programs for people with breast cancer and traumatic brain injuries and funding for the Children's Hospital. The reversals would cost a combined $17 million. The AP/Examiner reports that the "extra Medicaid money appears to be the only large chunk of money from the stimulus package that could directly shore up the state's budget," as it can "free up tax dollars to be spent in the rest of the budget on other needs" (Slevin, AP/Examiner, 2/18).
  
  
• Kansas: Kansas is expected to receive $440 million in additional Medicaid funding over the next three years through the economic stimulus package, with $111 million expected to be received in the current fiscal year that ends June 30, the Kansas Health Institute News reports. By the end of FY 2009, the Kansas Health Policy Authority is slated to receive $56 million in additional Medicaid funding, the state Department on Aging will receive $21 million and Department of Social and Rehabilitation Services will receive $34 million. The three agencies will receive $207 million in FY 2010 and $122 million in FY 2011. Marcia Nielsen, executive director of the Health Policy Authority, and Andy Allison, Kansas's Medicaid director, at a briefing on Tuesday said that more stimulus money will be available for health information technology, pandemic flu preparedness, community health centers, nutrition and training for medical professionals. They said that an important part of the Medicaid funding is that it can be used to "offset" spending from the state budget (Shields, Kansas Health Institute News, 2/17).
  
  
• Maryland: Health care advocates are pressing Gov. Martin O'Malley (D) to use some of Maryland's expected $600 million in stimulus funds to expand Medicaid coverage to more low-income adults without children, the Baltimore Sun reports. The governor said on Wednesday that his primary concern "is to make sure we don't contribute to our economic problems by laying off 700 state workers," noting that he would like to maintain the current Medicaid program and not expand access until state lawmakers develop a more permanent budget and spending solution (Dechter/Smitherman, Baltimore Sun, 2/18).
  
  
• New York: Gov. David Paterson (D) warned that funds from the stimulus package will not avert the proposed cuts to hospitals and nursing homes and said that the state needs to shift acute care funding to prevention programs, the Binghamton Press & Sun Bulletin reports. The Healthcare Education Project announced Wednesday that it will begin airing advertisements calling on Paterson to use the $11 billion New York is set to receive for Medicaid assistance to avoid cutting about $3.5 billion in health care spending in FY 2009-10, which starts April 1. Kenneth Raske -- president of the Greater New York Hospital Association, a sponsor of the Healthcare Education Project -- said, "If Gov. Paterson uses the Medicaid funds in the stimulus bill as they are intended on Medicaid beneficiaries and the institutions that serve them, we can avoid health care cuts that will unquestionably lead to layoffs, elimination of services and departments, and the outright closure of facilities." Paterson said that the state is not required to use all of the funds for Medicaid, adding that under his plan, "[h]ospitals are not going to go bankrupt," as revenues would be cut only 2%. He stressed that money needs to be invested in prevention and wellness programs that would save the state money in the long term (Spector, Binghamton Press & Sun Bulletin, 2/18).
  
  
• Virginia: The state is expected to receive an estimated $1 billion from the stimulus package -- including $800 million in additional Medicaid funding -- that it will use to help close its budget gap, the Washington Post reports. Gov. Tim Kaine (D) said that the extra Medicaid money will permit him to forgo eligibility restrictions he proposed in December 2008 (Kumar, Washington Post, 2/17). On Wednesday, the state Senate passed a budget rescinding several proposed cuts, including those to state health care programs (Walker/King, Virginian-Pilot, 2/19).
  
  
• Wisconsin: Gov. Jim Doyle (D) on Tuesday proposed closing the state's $5.7 billion budget deficit by mid-2011 by using $2.1 billion in stimulus money to protect things such as state health care programs, which he says is a priority, the Milwaukee Journal Sentinel reports. Doyle's budget proposal would postpone the expansion of Family Care, which allows seniors and disabled residents to obtain long-term care at home, and delay implementation of BadgerChoice, a plan to have the state negotiate health plans for small businesses (Walters et al., Milwaukee Journal Sentinel, 2/17). In related news, the state Senate on Wednesday approved a bill that would tax hospital revenue to draw down additional Medicaid funds from the federal government (Walters, Milwaukee Journal Sentinel, 2/18). The tax would reward hospitals that provide the most care to participants in BadgerCare Plus and other state Medicaid programs, as well as help pay for the expansion of BadgerCare Plus to 41,000 uninsured childless adults (Milwaukee Journal Sentinel, 2/17).