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Many state health policy-makers see a new day and a new chance to improve the welfare of the disadvantaged in their states. The incoming George W. Bush administration has made much of its pledge to return more power to state and local governments. The potential transfer of more power in health care decision making from Washington, DC, to the states is embodied by Wisconsin’s governor, Tommy Thompson.
"If Tommy Thompson makes it, thatll be a good thing," Trish Riley, executive director of the National Academy for State Health Policy, in Portland, ME, tells State Health Watch. "He has provided one of the best Medicaid programs in the country. He is an innovative, long-term care leader with a strong, fine program in a state that fought hard with the federal government for more flexibility."
Thompson presides over Wisconsin’s Children’s Health Insurance Program (CHIP) offering, BadgerCare, and is Bush’s nominee to be secretary of the Department of Health and Human Services. BadgerCare is seen by many state policy-makers as one of the more successful children’s health insurance programs in the country. Thompson, 59, is America’s longest-serving Republican governor and was a leader in voicing support for cutting welfare rolls.
"Bush sends a signal that he wants state flexibility," Ms. Riley adds. "I don’t know what is expected on the Medicare reform issue. It’s going to be interesting."
Thompson has many detractors, Ms. Riley says, but "from one narrow perspective, he’s a good choice."
Many states got a break from Congress before the new year and new administration showed up. Congress reached a compromise that allowed states to keep the federal CHIP money they had not spent. The unspent dollars from 40 states that had not spent their federal allocations were to be siphoned off to the 10 remaining states that did manage to spent their allotments. Those states who were losing money now have through the end of fiscal year 2002 to use the previously unspent funds. It was unusual for a such a compromise to be reached in a divided Congress.
"Almost everyone came away happy," Greg Haifley, deputy director of the health division of the Children’s Defense Fund, of Washington, DC, tells SHW. "Our view was that we are in times of record budget surpluses, so we’re grateful the money is staying in CHIP."
Mr. Haifley says the near miss for states that had not spent their funding was a warning signal that not spending the money is a risk. But with the Bush administration proposing tax cuts that could lead to the elimination of the budget surpluses, he says the Children’s Defense Fund will eye tax cuts in terms of what they do for kids in low-income families. Among the questions his organization will use to frame the debate is: Are such cuts fair to those at the lower end of the economic scale as opposed to those who are well off?
"The second part is that if you get a favorable answer to the first question, the right tax cut for the right people, you shouldn’t have to worry about other priorities," Mr. Haifley says. "We will question who will benefit and also how much does [a tax cut] spend? Does it interfere with our priority to insure every child? Is it a change in administration, party, philosophies, and politics of power and how that power will be used?
"Will it be different?" he asks. "We will praise or criticize as needed."
The Massachusetts Hospital Association (MHA) in Burlington is dealing with a tax cut that is a done deal. It’s from the state, though, not the federal government. The state’s hospitals are in a pinch. Two-thirds of them are losing money; more than one in six of the state’s nursing homes are bankrupt; home health has struggled so much in the past year that 25% of the state’s agencies have closed up shop; and 25% of the state’s hospitals have closed in the past 10 years. An income tax cut, approved by voters in November, goes into effect this year.
"The system is in fragile shape. We were assured by supports of the tax cut that there is plenty to fully fund education and human services," Richard Averbuch, senior director of communications for the MHA tells SHW.
"Now, here we are. The day of reckoning is here. The government will soon issue state budget rules, and funding will the in there. Medicaid will be in there. . . . We look for each party in the system to do its hare. We don’t expect the state to make up for federal tax cuts," he explains. "That’s not fair. What we need is for Washington to do its fair share for Medicare and the private sector to do its share for employees. The balance has shifted too far out. We need to stabilize the system."
The Balanced Budget Act of 1997 initiated the state’s health care crisis, Averbuch asserts, and the health of the state has gone downhill since. The average hospital operating margin in fiscal year 1999 was -2.8%, the MHA says, so that further losses mean hospitals must start using their reserves, which were intended as seed money for the future.
Also, according to the MHA, the state’s Medicaid payment ratios are the 11th lowest in the United States. The Medicare Payment Advisory Commission says that the state’s Medicaid margins are the sixth lowest in the country.
"Medicare and the Balanced Budget Amendment are relative to the federal agenda. It is not strictly about DC affecting Massachusetts," Averbuch says. "A lot of the issues will be the same as they have been. A new [presidential] administration may not change things drastically. We favor a bipartisan approach to pulling things together. It will be the continuation of the same policy discussions. But a lot of the action is closer to home in terms of what we can do to get the state government to create a safety net for Medicaid payment and policies, and for state support for hospital care for the unisured."