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Medicaid action called ‘shell game’

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By Gary Fineout
4/16/2009 © Health News Florida 

State lawmakers on Wednesday used the first round of federal stimulus money intended for Medicaid to plug a shortfall in overall spending in the current year’s budget through a complicated series of maneuvers that critics say violates Congressional intent. 

With barely any discussion, the legislative budget panel plugged $1.8 billion in federal stimulus funds into the current Medicaid budget, which is running short of money because of increased demand as the number of uninsured keeps climbing.

At the same time, the panel transferred $900 million in state money from Medicaid into a reserve account. Federal law says states are ineligible for an increase in matching money for Medicaid if it’s placed in a rainy day account. 

“Using stimulus funds to sustain Medicaid for vulnerable Floridians is one thing,’’ states a release from Florida CHAIN, a health care advocacy group. “But using that money for anything and everything else (including boosting reserves) while continuing to chip away at Medicaid is something entirely different.’’ 

Lawmakers say what they did on Wednesday actually spares Medicaid from any more reductions. Without the move, they say, the state would have been forced to make deeper cuts, likely to Medicaid, in order to balance this year’s budget. 

Wednesday’s maneuvers won’t restore funding to Medicaid programs that were cut in January’s special session, including nearly $350 million in pay-rate cuts to hospitals, HMOs and nursing homes. 

Florida Hospital Association President Bruce Rueben said for each dollar the state cuts in hospital payments, Florida loses $4 in jobs and spending. He based that on a study  released Thursday by the University of Florida that shows when lawmakers reduce hospital spending by $100,  there are more than $415 million in reductions to local economies and a loss of 2,187 jobs statewide.

“These impacts are felt by everyone whose livelihood depends on these facilities, from employees to suppliers. And more importantly there is a direct impact on the services that hospitals are able to provide to our patients,” Rueben said.

The study shows Florida hospitals have 233,586 full-time staff. The total statewide economic impact of hospitals in 2007 was nearly $170 billion, according to the study, wich the FHA contracted with the UF to conduct.

While the study analyzes a “hypothetical” $100 million reduction to hospitals’ budget, that is about equal to the amount the Legislature trimmed from hospitals’ budgets in the January special session -- the same cuts the Legislative Budget Commission allowed to stand on Wednesday.

Karen Woodall, director of outreach education for the Florida Center for Fiscal and Economic Policy, said social service advocates had hoped the stimulus funds would be used to prevent further reductions in health spending and offset reductions made to Medicaid over the last two years. "Clearly, that hasn’t happened,” she said.

The $1.8 billion is part of more than $4 billion in Medicaid funds that Florida expects to receive over three years because the federal matching rate was raised in the nearly $800 billion stimulus package approved by Congress and signed into law by President Barack Obama in February.

But even as the money began to flow from Washington, state revenue estimates were being revised. State economists in March concluded that the state budget would wind up $700 million in the red even after lawmakers cut spending by $1.2 billion at the start of the year. The state’s current fiscal year ends June 30. 

Democratic legislators sharply criticized the “shell game’’ they say is going on, especially with proposed state budgets that would cover state spending from July 1, 2009 to June 30, 2010. These budgets also heavily rely on additional stimulus funds, with lawmakers swapping out state money for newly found federal money. 

“Even though the strings weren’t strong enough to keep it in health care, I think we had an obligation to use it in that arena,’’ said Sen. Nan Rich, D-Weston, who sits on the Senate budget panel that oversees health care spending. 

State lawmakers are using increased Medicaid matching money to save programs such as Medically Needy and MEDS-AD, which helps the elderly and disabled. Both these programs were scheduled to end this summer. 

But the infusion of stimulus money hasn’t stopped the House and Senate from slashing health care spending. The House budget would cut nursing home reimbursement rates by 2.5 percent and reduces funding for county health departments. The Senate proposal cuts most providers by 3 percent. 

Rich said what is adding “insult to injury” is that the Senate’s proposed $1-a-pack hike in the cigarette tax is not being used to help health care programs either. She says that at the very least the tobacco tax should be used to create a permanent source of money for Medically Needy and MEDS-AD so the programs won’t be in jeopardy when federal stimulus funding runs out. 

--Contact Gary Fineout