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States are in a tough spot. Coffers are running low, administrations are slashing spending, and they are talking about raising taxes.
It’s a confluence of events and agendas that elected officials would rather avoid, but to help maintain health care for those who need it and to protect the rest of the population from the terrors of bioterrorism, states are having to do some quick thinking and fancy dancing.
In August, according to the National Association of State Budget Officers, more than half of the states were in the throes of recession or were close enough to be worried.
Since Sept. 11, it’s gotten worse. On average, 15% of state spending goes to Medicaid, and at least 20 states are looking at next year fearfully, according to a recent survey by the Kaiser Commission on Medicaid and the Uninsured in Washington, DC.
The study, conducted in 20 states in October, shows the economic damage is accumulating in the past few months, with revenue growth dropping and the cost reductions mounting.
"Some states have Medicaid eligibility on the table, some are lowering their eligibilities, some have quit doing outreach," Julie Hudman, Kaiser Commission associate director, tells State Health Watch. "States have to balance their budgets and if Medicaid is part of that, they must look at it. States are rightfully trying to decide which way to turn."
The Kaiser Commission study points out a feature of Medicaid that state public health directors have always known and regarded warily — the federal grants are meaningless when the state cannot afford its share. The downward spiral becomes more powerful when states make their cuts because newly unemployed workers will find it harder to find coverage.
"On average for each $1 that states cut from their Medicaid general fund budgets, the total amount of spending on the program drops by $2.33 because of the even greater loss of federal Medicaid matching funds," the report states.
"In states with higher than average federal matching rates, however, the economic consequences of cutting Medicaid can be even more severe since each $1 cut in state funds causes a total of more than $3 to $4 to be withdrawn from the state’s economy," the report adds.
The National Conference of State Legislatures offers a similarly grim view of the immediate future in its report on the fiscal outlook for 2002.
"The news is not good," the report states, "with only a few exceptions, state fiscal conditions have taken a dramatic downturn. Moreover, as legislative fiscal analysts look ahead, the outlook is bleak."
Highlights of the report include these findings:
The report likens the current downturn to the rough economic waters of the early 1990s and concludes that most states are probably going to wait until their legislatures convene in 2002 to begin addressing the imbalances in their respective budgets.
Virginia has taken a controversial accounting tack by trying to funnel almost $260 million from the Medicaid program to the state coffers to offset revenues.
The federal General Accounting Office has cocked an eye at the state, saying the attempt to use waivers given by the Bush administration runs counter to what Congress wants. Virginia officials say other states have used the tactic for years, that the money is there to be taken, and the federal government has given its approval.
The National Governors Association in Washington, DC, which is very aware that many states face shortfalls of more than $1 billion, says the House economic stimulus bill would, if it is enacted, reduce state revenues by at least $5 billion annually and create in its wake huge budget cuts.
Instead it recommends that temporary increases be made in Medicaid’s federal medical assistance percentage (FMAP) by 10 percentage points, the introduction of a "hold harmless" provision for states that were set to have their FMAPs held for 2002, and the approval of a one-year extension of supplement grants for the Temporary Assistance to Needy Families program.
Beefing up protection against bioterrorist attacks requires a delicate dance between the states and the federal government. Amy Smithson, director of the Chemical and Biological Nonproliferation Project at the Henry L. Stimson Center in Washington, DC, recently wrote in The New York Times that the federal government must realize that "all emergencies are local . . . Instead of having federal contractors hopscotch all over the country to train local people, training should be turned over to professional schools like police and fire academies and medical and nursing programs, with federal guidance, in order to ensure that preparedness remains constant."
The National Association of County and City Health Officials (NACCHO) agrees that communication between states and Washington, DC, is crucial for proper preparedness.
In its recent report on bioterrorism, Local Centers for Public Health Preparedness: Models for Strengthening Public Health Capacity, NACCHO looked at the public health programs in DeKalb County, GA; Denver; and Rochester, NY.
Using these departments as models, NACCHO’s study concluded that strong "partnerships and communications with agencies involved in bioterrorism preparedness and emergency response efforts are important," including surveillance activities, response planning, training, tabletop exercise planning, and implementation.
"Local, state, and federal partners each play a vital role in planning and response, and therefore linkages with these partners are essential to successful planning and response," the report states.
States have found themselves unequal in the abilities to pay for such planning and responses. Secretary of Health and Human Services Tommy Thompson told Congress on Oct. 3 that there are 42 Epidemic Intelligence Service graduates from the Centers for Disease Control and Prevention in Atlanta among the 50 states.
Mr. Thompson said he wants to make sure there is at least one per state to fight potential epidemiological episodes.