Falling Mich. revenues threaten Medicaid

Even as state tax revenues fell the past four years, Medicaid
caseloads shot up 27 percent and costs rose 40 percent. The state
now spends a quarter of its general fund on Medicaid coverage
— and more than $7 billion annually overall.

Virtually all state programs are under increasing pressure.
Spending for higher education, for example, is down 14 percent
since 2002. Payments to local governments have been slashed by 15
percent since 2001, leading to layoffs of police, shorter library
hours and fewer road projects.

Something must be done to limit Medicaid’s growth and
bolster other services, experts said.

“The stock market, tax cuts, prison spending, the sluggish
economy and Medicaid have all contributed to the state deficit. But
Medicaid is the elephant in the room,” said Stuart Paterson,
a senior research associate for the Citizens Research Council of
Michigan and former state Medicaid director.

Virtually all of the $400 million in tax increases Gov. Jennifer
Granholm has proposed on cigarettes, liquor and inherited estates
are earmarked to close a yawning hole in Medicaid. Yet another $200
million shortfall is projected for this year’s state budget,
and half of that is because of the mounting Medicaid caseload.

“This is unsustainable,” said Paul Reinhart, who
directs the state Medicaid program. “There is recognition
that something must be done.”

The state nibbled at the problem last year, cutting some
Medicaid services, such as dental care, podiatry, hearing aids and
chiropractic programs for adults.

Those services were recently added back into the budget by a
Senate subcommittee, although senators provided no funding
mechanism for the $27 million expense. Another proposal to cut $13
million in home help services has been put on hold.

Granholm said her reading of the sentiment of state residents is
that it is a priority to provide health care for low-income people
with disabilities, seniors, children and pregnant women.

“I’m not willing to just lop 200,000 people
completely off of health care,” Granholm told the newspaper.
“I think that we have an obligation as a society to protect
the vulnerable.”

But Granholm acknowledged that if she can’t convince the
Legislature to go along with “sin tax” proposals, the
state will need to make deep and painful cuts in Medicaid.

“Then you will have more and more people without health
care and fewer critical services provided,” she said.
“People will have to make choices about whether they want to
provide health care for seniors and children or whether they want
to provide prison space for violent inmates, or funding for
schools, or police protection for local communities.”