Nobody knows for sure how budget cuts from Capitol Hill will land in Hawaii and other states. But the omens for Medicaid, the massive health-care program that assists lower-income populations, do not look good.
It’s crunch time for Congress this week, with both chambers needing to pass a stopgap funding bill to avert a government shutdown at midnight Friday. Beyond that, however, a larger fiscal imperative looms.
The House Republican majority has adopted a budgetary blueprint and has instructed its Energy and Commerce Committee to cut spending under its supervision by $880 billion. That jurisdiction includes Medicare and Medicaid; with GOP leadership committed to preserving Medicare, that leaves Medicaid likely to bear the brunt. And $880 billion represents some 11% of total Medicaid funds.
This would deal a more broadly damaging blow to the health-care system than many people suspect, one that Hawaii would feel acutely. And that’s why it’s important that state lawmakers follow through on plans to anticipate that, setting aside contingency funds to soften the impact as much as possible.
An estimated 21% of Americans are covered by Medicaid nationally: Among its largest constituent groups are children in low-income families, children with disabilities and nursing home residents — with well over half those populations receiving this aid. Over 40% of all births, health care for low-income adults and for disabled adults are paid for in this way, according to the nonprofit Kaiser Family Foundation.
Medicaid grants are given to the states, which provide matching funds. In Hawaii, for every dollar of Medicaid spent, 60 cents come from the federal government and Hawaii picks up the other 40. So if the federal share drops as many fear, the hit to the state budget will be painful.
That’s why it is encouraging to see that the House version of the state budget includes a $200 million set-aside for unforeseen spending needs. It’s unlikely to offset every cut, but it will help. Two in five Hawaii households have incomes below what’s called the ALICE threshold (Asset Limited, Income Constrained, Employed), earning less than they need to cover health care and other costs.
Lawmakers partnering with Gov. Josh Green’s administration should give Medicaid considerations serious weight in the final budget.
The specific programs that are most exposed have not been identified, but potentially rural hospitals and community health centers could be affected.
Dr. David Derauf is CEO of one such center, Kokua Kalihi Valley, and he’s watching all this attentively. Political pressures to preserve Medicare and Social Security are stronger, he said, than for Medicaid, whose beneficiaries comprise a less organized voting bloc.
But, he rightly points out, cuts to Medicaid will ripple outward to weaken health care and general conditions beyond its target population.
The homelessness count could surely rise, and the resources to provide shelter and care, which Medicaid helps to support, will shrink. Those who fall off the Medicaid rolls are likely to be uninsured, with more turning to emergency rooms to find acute care. Derauf expects that this would push up costs of care for the general population, since hospitals would be unable to find reimbursement otherwise.
“We’re all going to pay,” he added. “We can pretend that we won’t, but we will.”
Hawaii health providers are still hoping to stave off the worst impacts of the federal cutbacks. Clearly, though, the compelling need at this stage is for a clear-eyed assessment of the state’s vulnerabilities, and preparations to insulate the unprotected as much as we can.
