Budget Deficits Force Many States To Reduce Health Services, Spend Tobacco Settlement Payments
The Wall Street Journal today examines the increased number of states that have reduced health services and spent their shares of the national tobacco settlement to cover budget deficits. In the last fiscal year, which ended June 30 in most states, 46 states reported budget deficits of a combined $37 billion, the Journal reports. This fiscal year, states expect budget deficits to reach a combined $58 billion. Most states by law cannot have a budget deficit at the end of their fiscal years, which forces them to "slash spending, raise taxes or spend reserve funds." In addition, many states have reduced health services expenditures, reductions that analysts expect to have a larger impact on the public than in past economic recessions because state budgets "play a larger role in funding" the services than they used to (Gold/Gavin, Wall Street Journal, 10/7). Increased enrollment in state Medicaid programs has contributed in large part to budget deficits, the Newport News Daily Press reports. According to Sugit Canagaretna of the Southern Legislative Conference, "Increased caseloads have come with more layoffs, with people losing medical benefits." Although some states have moved to reduce Medicaid costs through prescription drug formularies and other programs, Canagaretna said that the programs do not "guarantee immunity from budget cuts," the Daily Press reports. In addition to health services reductions, some states have used their shares of the tobacco settlement to balance their budgets (Lessig, Newport News Daily Press, 10/6).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.