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Opinion The dumbest budget cut ever

The House budget that could be approved in the next two weeks would cut more than a billion dollars in health and human services spending over the next two years, more than $710 million of it Medicaid. That’s a bad idea for several reasons.

The deep reductions in Medicaid funding means fewer services for people who need them, lower reimbursements for the medical professionals who provide them, and a loss to the state of more than $2 billion in federal Medicaid funding since the federal government matches state Medicaid expenditures 2 to 1.

A significant portion of the budget savings comes from paying doctors less for treating Medicaid patients and from the elimination of a routine inflationary increase that’s built into the program to take into account rising health care costs.

The House budget also assumes $80 million in savings from the Community Care program that manages the care of many Medicaid patients, a figure that some officials privately say is significantly overly optimistic.

If that’s true, it means state officials will have to find savings elsewhere to make up the difference just like they will have to scramble to compensate for the lack of funding for the increases almost certain to come in health care costs.

The proposed cuts reflect an ongoing mischaracterization of Medicaid as a simply a burden on the state budget.

Lawmakers frequently refer to Medicaid that way or more often as a place where funding can be slashed to help address the budget shortfall and avoid any revenue increase or even keeping tax rates the same by leaving the 2009 temporary tax increases on the books for two more years.

Medicaid does account for roughly 60 percent of the $3.9 billion the state spends on health and human services every year but it provides care for 1.5 million people.

Two-thirds of Medicaid recipients are children. People with disabilities are the next largest group of Medicaid beneficiaries, then seniors and pregnant women.

Federal law requires states to provide basic services under Medicaid but allows them to decide what optional services they will provide, though optional is a misnomer. Some of the services on the optional list include prescription drugs, mental health services, prosthetics, and hospice care.

They certainly don’t seem optional to the people who need them. But the optional label has led many conservative groups to call for their elimination.

The John Locke Foundation recently recommended that the state stop covering prosthetic devices for people on Medicaid who lose an arm or leg even though every state in the country except Mississippi provides them. The Locke Foundation budget proposal would also eliminate dental services and vision care too, even transplants.

If there’s anything that’s praiseworthy in the House budget it is that for the most part the plan stays away from the specific draconian cuts that Locke proposes.

Instead it relies on vague troubling reductions like the end to the inflationary increase and lower reimbursements from providers, which are just as potentially damaging, but don’t garner as many headlines.

Like any large program or institution in public or private Medicaid has some inefficiencies and even some fraud, which state officials have become increasingly more aggressive in addressing.

But overall Medicaid is a proven, effective way to provide medical care to the most vulnerable people in North Carolina. Any significant cuts to the program would directly affect them, not to mention cost the state more than $2 billion in federal funding.

North Carolina and the people who rely on Medicaid simply cannot afford that. It would be one of the dumbest cuts the General Assembly could make.

Posted by Chris Fitzsimon at www.ncpolicywatch.com.


Fitzsimon File: Running the Numbers

37,000—number of unemployed workers in North Carolina who lost their unemployment benefits Saturday after Governor Beverly Perdue vetoed legislation that tied benefits to 13 percent cut in state budget if a budget if not passed by June 30 (“Bill to costs the jobless,” Charlotte Observer, April 17, 2011)

30—number of Republicans who voted against an amendment on Senate floor that would have removed the budget resolution from legislation and simply extended unemployment benefits for 37,000 unemployed workers (House Bill 383 Information/ History, General Assembly of North Carolina)

0—number of hours notice given that legislation to combine budget resolution and extension of employment benefits was going to be heard in Senate Appropriations Committee on Tuesday. (Senate Calendar, April 13, 2011)

5—number of hours after a bill combining budget resolution and unemployment benefit extension passed the Senate Appropriations Committee Tuesday that rules were suspended and the bill was brought up for a vote on the Senate floor. (Ibid)

6—number of days before Senate considered a bill combining budget resolution and unemployment benefit extension that Rep. William Wainwright introduced, House Bill 676 that would extend unemployment benefits for 37,000 unemployed workers (House Bill 676 Information/History, General Assembly of North Carolina) 13—total number of sponsors of House Bill 676 that would extend unemployment benefits for 37,000 unemployed workers (Ibid)

0—number of Republican sponsors of House Bill 676 that would extend unemployment benefits for 37,000 unemployed workers (Ibid)

0—number of hearings called by House Republican committee chairs on House Bill 676 that would extend unemployment benefits for 37,000 unemployed workers (Ibid)

0—amount in dollars that extending federal unemployment benefits would cost the State of North Carolina (House Bill 676, General Assembly of North Carolina)

3,200—number of jobs that will be eliminated in the UNC system in spending proposal for roughly 13 percent budget cuts released by House Republicans last Tuesday that slashes 15.5 percent from UNC budget (“Picture of possible UNC cuts is grim: 3,200 positions, 9,000 courses,” Charlotte Observer, April 7, 2011)

12,209—total number of jobs, including 8,700 teacher assistants, that will be cut in public education in a spending proposal released by House Republicans Tuesday according to the Department of Public Instruction. (NC Democrats deride GOP school, health plans, Associated Press, April 15, 2011)


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