State cuts may hurt Medicaid funding

Budget deficit could mean chopping from hospital aid to the poor to ease budget woes.

Sofia Kosmetatos / The Detroit News

Michigan hospitals say they'll have to slash services to the poor and cut jobs if the state legislature passes proposed budget cuts to Medicaid in an effort to close a $400 million budget deficit.

The House bill would make the deepest cuts to hospitals -- $28 million in the remainder of the fiscal year, which ends Sept. 30, compared with $13.4 million in the Senate bill and $5 million in Gov. Jennifer Granholm's budget proposal.

Hospitals were spared in last year's budget, but have seen more than $686 million in cuts since 1996, according to The Partnership for Michigan's Health, a coalition of organizations representing the state's doctors and hospitals. Further cuts would spell disaster on several fronts, and could mean more hospital closures, fewer doctors accepting Medicaid payments and less access to care for the poor and uninsured.

"We do not issue this warning lightly. If lawmakers cut health care again, they will be voting to eliminate good jobs and deny health care to residents across Michigan," said Spencer Johnson, president of the Michigan Health & Hospital Association.

The proposed cuts come at a time when hospitals are serving a ballooning number of Medicaid patients. One in seven Michiganians is covered by Medicaid, and the numbers are rising as more people lose their jobs. Hospitals also are seeing more people who don't qualify for Medicaid but don't have any insurance, either.

Oakwood Healthcare System, for example, has had a 25 percent increase in the past six months in the number of patients who can't pay for services. That increase pushed the system's uncompensated care costs to nearly $70 million, compared with $40 million in 2004, said Gerald Fitzgerald, president of Oakwood Healthcare, Inc. and MHA board chair.

In a recent survey of its members to be released today, the association asked what would happen under a $100 million (3 percent) cut to state Medicaid payments, which are matched by federal dollars.

• 65 percent of hospitals that responded said they would cut jobs.

• 62 percent said they would increase employee co-payments for health care coverage.

• 65 percent said they would reduce community benefit activities such as diabetes education, school nurse programs, smoking cessation, weight-loss programs, health clinics and other prevention and wellness programs.

For lawmakers, the cuts are an unfortunate reality.

"We're in the middle of a budget crisis, and it is on us because of the loss of manufacturing jobs," said State Sen. Tom George, a Republican from Kalamazoo. Even though he is a doctor, he said he wouldn't advocate sparing hospitals over other services, like police, fire and schools. "Our duty in the legislature is to spread the pain as far and thinly as we can to try to do it fairly," he said.

Granholm spokeswoman Liz Boyd said the governor has tried to preserve Medicaid funding. "If we make cuts to Medicaid, there's a real human toll, whether it's from denying services to the vulnerable or challenging an important part of our economy."