That old saying of being penny-wise and pound-foolish has never been truer than when Gov. Mark Parkinson decided to reduce Medicaid payments to health care providers by 10 percent for the remainder of the state's fiscal year in order to help balance the budget. Though these cuts are projected to save the state's general fund $22 million, in reality it will cost health care providers and the patients they serve much more.
Medicaid is a shared federal and state program. For every dollar paid under Medicaid, only 30 cents comes from the state's coffers — the federal government pays the other 70 cents. And in order to save the state $22 million, health care providers will have to give up $73 million. In other words, the state of Kansas is leaving $51 million in federal money on the table to save $22 million. That just does not make prudent financial sense.
And this could continue to get worse. If Medicaid cuts are carried into state fiscal year 2011, the payment reduction provides the state a savings of $77 million; in turn, it eliminates $140 million in federal matching funds that would come directly to Kansas. The total cuts to health care providers would be about $217 million.
Kansas hospitals and other health care providers recognize the seriousness of the state's financial situation and the need to make adjustments to the budget. We all want to do our part to get the state over this current financial crisis. However, this decision is not only bad financial policy, it could become unhealthy for the citizens of Kansas.
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Medicaid payment cuts usually lead to cuts in services. For the 300,000 low-income Kansans on Medicaid, this will threaten their access to crucial health care services.
Medicaid payments to providers have always been significantly below the costs of providing care. This causes everyone to pick up the difference and spread the loss across the rest of their services. Medicaid cuts not only affect hospitals, but every health care provider — doctors, nursing homes, pharmacies and others. Right now, providers are seriously considering whether they will be able to continue to provide the same services currently being provided in their communities. If services are discontinued, it will affect everyone, not just Medicaid beneficiaries.
Health care providers are under considerable financial pressure in the best of times. Hospitals, unlike other sectors of the state's economy, must continue to provide services to everyone who shows up — 24 hours a day, 365 days a year — regardless of their ability to pay. Funds that may have been used to replace equipment, buy new technology or hire needed health care workers will shrink accordingly because of these cuts.
The state of Kansas cannot afford that if it truly wants to recover from this financial crisis.