The pain of budget cuts

COEUR d'ALENE - It is unclear which programs and services will be affected by Gov. Butch Otter's plan to cut $25 million from the Idaho Department of Health and Welfare's budget.

What is certain is that it won't be painless, according to North Idaho providers of health care services to the state's disabled and poor.

The governor presented his proposed fiscal year 2012 budget Monday, calling for an overall funding cut of $35.5 million for state agencies. More than 70 percent of the proposed reduction comes from the state's Medicaid budget.

"Locally we expect the cuts to be very damaging to our ability to continue to transform lives of people with disabilities," said Russ Doumas, CEO of TESH, Inc., a Coeur d'Alene nonprofit service provider.

If state funding is cut for Medicaid programs and services that are eligible for matching federal funds, Doumas said the impact of the proposed reduction will equate to a much greater loss of funding.

The $25 million of state funds matches roughly $95 million in federal funding for a total cut of $120 million, Doumas said.

"These funds are used to provide services to adults with disabilities to help them remain living in our community and not in more costly and restrictive institutional settings," Doumas said.

Because 58 percent of the funding received by agencies like TESH pays the wages of direct care staff, Doumas said the proposed $25 million cut will result in the loss of an estimated 3,000 jobs and the loss of services for an estimated 2,000 persons with disabilities statewide.

"Any time there's a cut in Medicaid it impacts the whole community," said Mike Baker, CEO of the Dirne Community Health Center in Coeur d'Alene. "Anytime you have to scale back the services that are provided, it puts everybody in a pinch."

The private nonprofit Dirne center serves everyone regardless of their ability to pay for care.

"For us, the pressure moves up because we have more uninsured patients to deal with," Baker said.

Idaho Department of Health and Welfare spokesman Tom Shanahan said the agency's next step will be to develop different scenarios of what the reductions might look like. Health and Welfare representatives will present their findings to legislative leadership within the next few weeks.

"Any reductions at this point are going to cause pain, but we have to make thoughtful decisions so we don't shift greater costs to other entities," Shanahan said.

For example, Shanahan said, if cuts are made to medical services, budget planners must consider what the impact will be to hospital emergency rooms and county indigent funds.

Many Medicaid participants do not qualify for commercial insurance or have specialized needs not covered by private sector plans.

"Medicaid is their lifeline. We cannot lose sight of this during the decision-making process," Shanahan said.

Jon Ness, CEO of Kootenai Health, cautioned against speculating and overreacting so soon after Otter's initial recommendation.

It's a "very complicated issue," that will require a "very complicated analysis," Ness said.

There are about 23,000 Medicaid patients that receive services from Kootenai Health.

"It's about 9 percent of our total revenue," Ness said. Issues regarding state funding for Medicaid are not unique to Idaho, but are rather, a "national phenomenon," a result of the economy, Ness said.

Otter was one of 33 Republican governors who sent a letter last Friday to President Barack Obama and congressional leaders asking the administration to remove part of the federal health care reform law. The requested change would make it easier for states to slash enrollment in Medicaid programs. As it stands, maintaining Medicaid enrollments is a requirement states must comply with if they want to receive the federal dollars that make up most of the program's funding.

"The effect of the federal requirements is unconscionable," the governors wrote. "The federal requirements force governors to cut other critical state programs, such as education, in order to fund a 'one-size-fits-all' approach to Medicaid."

During a press conference Tuesday, the state's leading Democrats in Boise urged caution when reducing funding for services for the state's most vulnerable populations.

House Minority Leader John Rusche of Lewiston said Otter is missing the real point of government, reported Dustin Hurst of Idaho Reporter.

"We believe that maintaining public structures is essential to protecting the Idaho way of life for our families and businesses," Rusche said. "It is not 'tyranny' to feed hungry children, care for the disabled or educate workers."