Study: State cuts could impair healthcare

DALLAS, Dec. 23 (UPI) -- Projected state budget deficits for fiscal 2004 could reach $60 billion to $85 billion, forcing deep cuts in health care programs for low-income families, a Washington research group reported Monday.

The latest estimate of state revenue shortfalls in the fiscal period that begins July 1, 2003 are at least twice as large as deficits states faced during the recession of the early 1990s, according to the Center on Budget and Policy Priorities. The deficits represent 13 percent to 18 percent of state expenditures, according to the study.

"They will have to cut very deeply into services, raise taxes, or in most states, do both," said Iris Lav, CBPP deputy director. "There is really only one thing that could help this situation and that is for the federal government to provide fiscal relief for the states."

Lav said there is talk of stimulus packages right now in Washington. Relief could mean increasing the federal share of Medicaid or broad grants to states for specific program needs such as education.

The $60 billion to $80 billion deficit estimate compiled from 42 states comes on top of $67.5 billion in state budget shortfalls reported earlier in the current fiscal year, according to the National Conference of States Legislatures. About $50 billion of that was closed when fiscal 2003 budgets were enacted but $17.5 billion in new shortfalls have opened since then, according to the NCSL.

"When governors release their budgets for 2004 next month and state legislatures convene, states will be faced with closing both the new emergency gaps for the 2003 budget year and the massive new deficits for 2004," Lav said.

Eleven states have already approved or proposed cutbacks that could remove about one million people from Medicaid and State Children's Health Insurance Programs, the majority of whom are working-poor parents, according to another CBPP study.

Leighton Ku, one of the study's authors, said the cutbacks are "deeply distressing" because they come at a time when private health insurance is declining because employers can't maintain it and workers can't afford it on their own.

"Because of that it was important that state Medicaid programs and CHIP programs were filling those gaps by expanding coverage to help those people during these low times," he said. "Instead, because states are so hard-pressed, what we're going to find in the coming year is that we will see a reduction in Medicaid coverage coming alongside that which is following in private health insurance coverage."

Ku said the result will be larger number of Americans without health insurance.

The cutbacks examined in the study were in California, Connecticut, Massachusetts, Missouri, Montana, Nebraska, Nevada, New Jersey, Oklahoma, Tennessee and Washington state.

"Action taken in New Jersey and proposed in California, Connecticut and other states points to a developing trend of eliminating coverage for large numbers of working-poor parents not on welfare," said Robert Greenstein, CBPP director. "Providing health insurance to parents only if they go on welfare -- and denying coverage to parents working hard at very low wages -- is sharply inconsistent with welfare reform efforts to move people from welfare into the workforce."