Federal health care cuts put new pressure on state budget

By Tim Talley

Published: March 28, 2008

OKLAHOMA CITY (AP) _ Cuts in the federal government's support of a program that provides health care to about 20 percent of Oklahomans is putting new pressure on a state budget already stressed by growing demands to spend more on roads, schools and prisons.

Federal funding for Oklahoma's Medicaid program, which provides health care to low-income and elderly citizens, has dropped $142 million over the past five years as the government shifts some of the cost of the entitlement program to states, according to its administrator, the Oklahoma Health Care Authority.

A federal-state partnership, federal matching funds for Medicaid have dropped from $2.40 for each state dollar invested in the program to $1.93 today.

"It's gradually ratcheting down," said Rep. Doug Cox, R-Grove, a doctor and chairman of the House Public Health Committee.

But during the same period, enrollment in the state's Medicaid program increased 18.5 percent and now totals more than 700,000 Oklahomans, according to OHCA.

"It's critically important. For a large percentage of the Oklahoma population, that's the only health care they have," said Cox, an emergency medicine physician at Integris Grove General Hospital.

State appropriations for the program have increased 76 percent and this year totals $771.7 million — more than 10 percent of the state's total budget. Including federal matching funds, Oklahoma's Medicaid program costs more than $3.9 billion a year.

OHCA officials are seeking a standstill budget for the fiscal year that begins on July 1 that adds no new services and merely attempts to maintain them at current levels. The budget request includes an additional $86.3 million over the current fiscal year of which $46.6 million would compensate for the loss of federal funds.

"That's not buying one more service. It's not increasing any provider rate," said Nico Gomez, spokesman for OHCA. "You're kind of at the mercy of federal rule changes," Gomez said. "No matter how efficient you are, the changes at the federal level you can't necessarily manage around."

The federal cutbacks are also straining the budget of the Department of Mental Health and Substance Abuse Services, which provides a variety of services to Medicaid-eligible recipients, said deputy commissioner Steve Buck.

The agency's 2009 budget request seeks $82 million over its base state appropriation including funds to fill gaps caused by the loss of federal funds, Buck said.

Oklahoma taxpayers are likely to pay an even greater share of Medicaid costs if Congress accepts President Bush's $3 trillion federal budget proposal.

Bush wants to cut almost $200 billion from the Medicaid and Medicare programs over the next five years, about three times the savings proposed last year that were rejected by Congress.

Much of the savings would come from freezing reimbursement rates for most health care providers for three years and from cutting payments to hospitals serving large numbers of the uninsured poor.

The plan would slow the annual growth of Medicare spending to 5 percent instead of the current 7 percent estimate. Spending growth would slow from 7.3 percent to 7 percent for Medicaid, which provides health coverage to about 50 million people nationwide.

The prospect of even deeper federal cuts is forcing Oklahoma lawmakers to reassess their spending priorities and consider ways to hold down costs.

"As that number comes down we're either going to have to increase the state portion or cut out some services or come up with more revenue through fees and taxes and eliminate inefficiencies in the system," Cox said.

In addition to rising health care costs, lawmakers are confronted by requests to increase spending in other critical areas.

Bills that would free up an additional $32.5 million a year for road and bridge repair have been approved by the House and Senate. State educators are seeking hundreds-of-millions of additional tax dollars for public schools and colleges and universities.

And lawmakers are struggling to find ways to appropriate more money to the Department of Corrections following the release of an independent performance audit that said Oklahoma prisons are antiquated and underfunded.

"It forces you to be more efficient and more creative," said Rep. Ken Miller, R-Edmond, chairman of the House Appropriations and Budget Committee.

The state's increasing health care burden may force officials to review Medicaid programs and services and discontinue those that are inefficient or underutilized.

"These reductions in federal money may force us to do something we should be doing anyway," Miller said.

"If this trend continues we're going to have to cut back on some of these programs," Cox said. Among other things, Medicaid pays for basic health care, nursing home care and hospital care for some of Oklahoma's neediest citizens.

"It's very tough," Cox said. "We're getting to the point where that's a critical issue."

Cox said administrators may consider reducing payments to health care providers in the Medicaid program, but that may force some doctors and health care professionals to abandon the program.

"Most of them participate not for the money but because of the feeling of wanting to help people," he said.

So far, lawmakers have expressed support for the state's Medicaid program by setting aside additional tax dollars to fill gaps left by lost federal money.

"The state has been very good about keeping its commitment to the program. It's been difficult," Gomez said.

"That reduction is sending some of the burden back to the states. The state will have to afford that," Miller said.

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