State budget sinks in Medicaid red ink

November 04, 2001|By C. Fraser Smith

THESE ARE days of cultural and psychological whiplash: Peace to war in the world. Boom to bust in the marketplace.

Black ink to red in Annapolis.

Embarrassing surpluses are replaced by a frightening deficit: $1.7 billion and counting.

Difficult adjustments will be necessary.

A health care advocate wondered, for example, whether dazed Marylanders might sustain costly health care for the poor by giving up their state income tax cut this year and next.

Realists said no. Nor would lawmakers ask for such a sacrifice. An election year is upon us. Life hasn't changed that much.

Within days, though, analysts said even that politically difficult adjustment wouldn't produce enough savings to cover the overall $1.7 billion shortfall.

Medicaid alone needs $173 million to $550 million to break even. The size of the problem in Medicaid, a program already standing at $1.13 billion, seemed to stun legislators.

At a recent hearing on the program's problems, committee members fought off the specter of disaster in the usual way, blaming:

Fraud and abuse.

Overuse of costly emergency rooms.

Greedy doctors.

They did this as expert witnesses said Maryland's system of health care for the poor can't go on as currently funded. Rates for doctors seeing Medicaid patients now run at a third of the low rates paid for Medicare patients. Some docs shown their lack of confidence by quitting the program.

Medical care organizations contemplate two similar responses: Leave the system outright, or stay in but refuse to accept new enrollees. Two MCOs have said they will exercise Option 2 in January. They will do so as a slumping economy will put more Marylanders in need and eligible for care under the program.

Before the hearing, two legislators asked Gov. Parris N. Glendening to intervene. Montgomery County Democrat John A. Hurson of the House Environmental Matters Committee and Baltimore County's Thomas L. Bromwell said a good system was in danger of failing for lack of adequate funding.

A spokesman for the governor said the state plans to improve its pay scale for doctors in January. The boost will represent "an extraordinary increase and an extraordinarily fair rate," he insisted. The rate game gets played every year, he said: "Every year, the MCOs try to negotiate rates that will give them the highest profit possible."

Outside the hearing room, though, an administration official was asking one of the providers how much more money would be needed to keep the system in operation: $20 million, came the reply. The administration's concept of "extraordinarily fair" fees would have to be $20 million fairer, up from the current proposal of $28 million to $48 million.

This crisis was, in a sense, just waiting to happen.

"We know the rates are too low," said Debbie I. Chang, a deputy health secretary.

Legislative analysts say the Glendening administration used "spurious assumptions" when it cobbled up its current budget, undershot the impact of inflation, undershot the number of recipients and, maybe, overestimated the results of a tax amnesty program needed to pay for an infusion of funds for the mental health system. Was "spurious assumptions" a euphemism for cooking the books? If you need to balance your budget, do you underestimate costs while overestimating revenues?

So, in the midst of change we do things the old way. We have a self-administered budget whiplash, for example. Deficits such as this occur because the executive and legislative branches don't want to tell us the truth: Medical care is expensive; making more people eligible makes it even more expensive.

The assembly has been blinking while the administration allows big Medicaid deficits to roll on and on - in technical violation at least of the state constitution's demand for a balanced budget.

A half billion-dollar deficit in the Medicaid program didn't happen overnight.

And here's a widely voiced prediction: Severe budget problems will push the state toward approval of slot machines at the racetracks. That option will be touted as the only available solution to our mounting needs.

Nothing will work, though, if the free lunch impulse can't be stifled.

C. Fraser Smith is an editorial writer for The Sun.

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