Planned Medicaid Cuts Would Cripple Public Hospitals and Clinics

L.A. County lobbies Congress to block Medicaid cuts to slash funding of healthcare for the poor by $200 million a year.

By Susannah Rosenblatt
Times Staff Writer

April 27, 2007

WASHINGTON — Los Angeles County supervisors are urgently lobbying Congress this week to block a Bush administration proposal that some fear would strip millions of dollars from the five public hospitals that treat the county’s poorest residents.

County officials say the nation’s second-largest public health system is in danger of losing $200 million a year in federal money under the president’s cost-saving plan. Without that funding, county officials would have to cover more hospital costs through taxes or other revenue.

“There isn’t a lot left to cut,” said county health chief Dr. Bruce Chernof. The budget reductions would hit a department already facing a deficit of hundreds of millions of dollars in the next few years.

Chernof described the reductions as equivalent to closing all the county’s public and contract health clinics, which handle more than 1 million outpatient visits a year.

The Bush administration proposal would reduce federal Medicaid spending across the nation by $5 billion over five years. The huge program, called Medi-Cal in California, helps pay the healthcare costs of 55 million poor people nationwide. Medicaid assists low-income families, and elderly and disabled people who meet federal income requirements, and reimburses public hospitals that care for the uninsured.

In Los Angeles County, with 2 million uninsured residents, the proposed change — scheduled to go into effect Sept. 1 — “would be devastating,” Supervisor Yvonne Brathwaite Burke said.

The supervisors have been meeting with lawmakers on Capitol Hill this week to make direct appeals on a number of federal proposals that could affect county services. But the Medicaid cuts are among the most pressing.

Healthcare advocates and members of Congress in both parties have expressed opposition to the proposal. Gov. Arnold Schwarzenegger sent a letter earlier this year urging Health and Human Services Secretary Mike Leavitt to reconsider the funding cuts. Public hospitals in Atlanta, Miami, Minneapolis and other cities also are bracing for the potential financial hit, said Edwin S. Rosado, legislative director with the National Assn. of Counties.

“Larger urban counties are very concerned about this because they take on responsibility as a safety net for dealing with the Medicaid population,” Rosado said.

Officials with the federal Centers for Medicare and Medicaid Services say that California’s hospital financing is exempt from the cuts under a special arrangement with the federal government. The 2005 deal was struck to ensure that counties were paying their share of Medicaid expenses to the federal government and to cover uninsured patients, federal officials said.

Medicaid officials say “California will not lose funds,” and have given verbal assurances of that to state officials, said Mary Kahn, a spokeswoman for the Medicaid agency.

Local leaders and advocates dispute that conclusion.

Under “a plain reading of what’s in the rule … it would clearly apply to California,” said Melissa Stafford Jones, president and chief executive of the California Assn. of Public Hospitals and Health Systems.

Because Congress has rejected similar proposals in recent years, the Bush administration is attempting to implement a new Medicaid rule that would reduce spending without the need for congressional approval. The House and Senate have included provisions to impose a one-year moratorium on the Medicaid cuts in the $124-billion supplemental appropriations bill that would fund the war in Iraq.

The politically charged legislation, which passed in both houses this week, complicates local legislators’ fight to block the Medicaid cuts, which would place caps on future funding.

In a meeting with county supervisors Wednesday, Rep. Xavier Becerra (D-Los Angeles) said that issues tacked on to the highly divisive Iraq war legislation would probably be lost in the political shuffle.

Rep. Charles B. Rangel (D-N.Y.), chairman of the House Ways and Means Committee, suggested to supervisors that members of Congress whose districts include public hospitals threatened by the Medicaid changes should unite in opposition to the White House’s efforts.

“We will be working together on this,” Rangel said.

The Medicaid change would cost California an estimated $500 million a year. The state’s 21 public hospitals operate about half of California’s top-level trauma and burn centers, offering expensive, specialized services not always available at private facilities, according to the California Assn. of Public Hospitals and Health Systems.

“It will have a ripple effect in other parts of the healthcare system,” Stafford Jones said.

A $200-million reduction could force one of the county’s hospitals to close, said Jim Lott, executive vice president of the Hospital Assn. of Southern California.

The cutbacks “would give the county pneumonia and the rest of the system would catch a severe cold,” Lott said.

“You can’t sustain $200 million per year in cuts and expect the county to continue to operate business as usual.”

Medicaid helps about 10 million California residents, according to the Kaiser Family Foundation, a Washington healthcare nonprofit.

Although the fate of the proposed change remains uncertain, board members said a series of meetings with members of Congress to push for support have been successful.

The “meetings were preaching to the choir,” Supervisor Gloria Molina said.


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