Many States’ Budget Cuts Affect Health Care Spending
Forty-six states begin their new fiscal years today, and many state governments are cutting spending on health care, eliminating jobs and increasing taxes and fees, the Orlando Sentinel reports. Twenty-seven states reported budget gaps for the fiscal year that ended yesterday, and 41 states are expected to face budget deficits in FY 2003-04. The slowed economy, declining revenues and increasing health costs contributed to many of the budget shortfalls, increased unemployment and higher Medicaid costs for states, the Sentinel reports. To combat the budget gaps, at least 20 states are expected to cut spending on health care, the Sentinel reports (Mahlburg, Orlando Sentinel, 7/1). Many states also have increased taxes on licenses, permits, gasoline or cigarettes; taxes on cigarettes increase in six states today. But increasing income taxes to close budget gaps is "the exception, rather than the rule," USA Today reports (Cauchon/McMahon, USA Today, 7/1). Since Jan. 1, 2002, 30 states have increased cigarette taxes, USA Today reports (McMahon/Cauchon, USA Today, 7/1). States also borrowed $224 billion in the 12 months ending yesterday to try to close budget gaps -- twice the amount they borrowed two years ago, USA Today reports (Cauchon/McMahon, USA Today, 7/1). The Christian Science Monitor reports that many states are continuing to borrow money this year as a "stalling tactic" to postpone decisions about "significantly" increasing taxes. "States are doing more and more things that amount to borrowing," Nicholas Johnson, an analyst at the Center on Budget and Policy Priorities, said (Sappenfield, Christian Science Monitor, 7/1). "State budgets are education, transportation, Medicaid, corrections, and that's about it. There's not a whole lot more that states do, so you have to go after one of those things," Nicholas Jenny, a senior policy analyst at the Rockefeller Institute of Government, said (Orlando Sentinel, 7/1).
Of the 46 states whose new fiscal year began today, a few have yet to pass a budget, the AP/Las Vegas Sun reports. Lawmakers in Connecticut, New Hampshire and Oregon have approved short-term spending plans that allow their governments to function while they continue to debate spending plans. California, which faces a $38.2 billion deficit, Nevada and Pennsylvania do not have new budgets (Chorneau, AP/Las Vegas Sun, 7/1). Because California has not passed a budget, state-funded health programs will receive only a portion of their usual payments, the San Francisco Chronicle reports (Schevitz, San Francisco Chronicle, 7/1). "Critical funding for hospitals, nursing homes, community colleges and small businesses is at stake," California Gov. Gray Davis (D) said (AP/Las Vegas Sun, 7/1).
New laws, including many affecting health care, take effect today in more than 24 states, the AP/Washington Times reports (AP/Washington Times, 7/1). Massachusetts cut more than 50,000 people from its Medicaid program and Florida cut spending on programs for nursing homes and the poor, the Sentinel reports (Orlando Sentinel, 7/1). Florida also approved a ban on smoking in the workplace, the AP/Times reports. A law requiring insurers to provide equal coverage for mental and physical illnesses will take effect today in Hawaii. Nevada will attempt to better investigate cancer clusters and begin to track medical malpractice insurance premium increases "more closely," according to the AP/Times. Nevada, along with Oklahoma, will cap noneconomic damages at $300,000 in medical malpractice cases. Connecticut will permit small businesses to offer medical savings accounts to employees (AP/Washington Times, 7/1).
The following programs reported on the state budget issues:
- ABCNews' "World News Tonight": The segment includes comments from Perry Kenny of the California State Employees Association, Ray Scheppach of the National Governors Association and California Controller Steve Westly (Muller, "World News Tonight," ABCNews, 6/30). The full segment is available online in RealPlayer.
- CBS' "Evening News": The segment reports on the situation in California and 11 other states. The segment includes comments from Jack Kyser of the Los Angeles County Economic Development Corporation and Scott Pattison, executive director of the National Association of State Budget Officers (Whitaker, "Evening News," CBS, 6/30). The full segment is available online in RealPlayer.
- NPR's "All Things Considered": NPR's Ina Jaffe reports on the situation in California (Jaffe, "All Things Considered," NPR, 6/30). The full segment is available online in RealPlayer.
- NPR's "Morning Edition": NPR's Bob Edwards interviews Scott Pattison, executive director of the National Association of State Budget Officers, about measures states are taking to cope with the deficits (Edwards, "Morning Edition," NPR, 7/1). The full segment is available online in RealPlayer.
- NPR's "Morning Edition": The segment includes comments from California Senate Republican Leader Jim Brulte, state Sen. Debra Bowen (D), state Senate Leader John Burton (D) and Westly (Jaffe, "Morning Edition," NPR, 7/1). The full segment is available online in RealPlayer.
- NPR's "Morning Edition": The segment reports that state governments are "demanding" lower prices from prescription drug manufacturers to lower Medicaid costs. The segment includes comments from Kevin Concannon, director of the Iowa Department of Human Services, CMS Administrator Tom Scully and Pharmaceutical Research and Manufacturers of America spokesperson Jeff Trewhitt (Prakash, "Morning Edition," NPR, 7/1). The full segment is available online in RealPlayer.
- NPR's "Talk of the Nation": The program interviews Jenny about the three states not facing a budget deficit (Neary, "Talk of the Nation," NPR, 6/30). The full segment is available online in RealPlayer.