Recession compounds woes as millions lose jobs, insurance

Struggling states slashing health care for poor

WASHINGTON — Even as President-elect Barack Obama plans an ambitious push to expand health coverage nationwide, states around the country are slashing health services to their poorest residents amid the economic downturn.

The cutbacks in public assistance come as millions of Americans are losing their jobs and health insurance.

In many cases, the cuts are so deep that even the huge federal rescue package being assembled on Capitol Hill may not be enough to restore services being eliminated in the burgeoning crisis, health officials warn.

On top of that, the faltering economy has all but killed trailblazing campaigns from California to Connecticut to expand coverage for the working poor—once seen as hopeful signs for national health-care reform.

In California, whose problems dwarf those in other states, nearly 500,000 poor people may soon lose access to free care as the state seeks to slash more than $1 billion from its budget for health care and social services.

South Carolina has cut treatment for low-income women under 40 with breast or cervical cancer and stopped providing nutritional supplements to people suffering kidney failure.

In southern Nevada, cancer patients without health coverage no longer have a place to get chemotherapy after the state's largest public hospital stopped providing outpatient oncology services.

Although Illinois is feeling a financial crunch, a top official says it is not contemplating cutbacks in services to people enrolled in Medicaid, the primary federally funded health program for the poor administered by the states.

Instead, Illinois hopes to wring more efficiencies from Medicaid by reviewing pharmacy outlays, strengthening disease management and tightening medical oversight, according to Theresa Eagleson, administrator of the division of medical programs at the Illinois Department of Healthcare and Family Services.

Eagleson said the state was seeing "a bit of an uptick" in people applying for Medicaid, above the 3 percent increase in enrollment projected for this fiscal year.

Because most of the increase consists of families and children, who are much less expensive to cover than seniors and people with disabilities, costs are not excessive and "our budget is fairly in line with what we projected," Eagleson said.

Still, Illinois' cash crunch is hurting hospitals, nursing homes and doctors across the state. Although the state was able to settle $800 million in Medicaid claims recently with new short-term borrowing, $1 billion in medical bills from providers remain outstanding, Eagleson said.

Anecdotal reports indicate that providers are closing shop or reducing access for Medicaid patients facing financial difficulties. About 1.4 million Illinoisans depend on Medicaid.

The Democratic-controlled House began offering some help Wednesday, passing a bill to extend federally funded health insurance to 4 million more children.

The legislation—expected to be signed by Obama—would commit about $33 billion over the next 4 1/2 years to the popular State Children's Health Insurance Program.

The 12-year-old program now covers 7 million children from families just above the poverty line that earn too much to qualify for Medicaid.

Congress also is at work on a stimulus package that could include as much as $100 billion to assist Medicaid.

Lawmakers plan additional assistance to help Americans keep their health insurance if they lose their jobs.

But even some congressional leaders concede the help will be insufficient.

"Let's be honest," said Assistant Senate Majority Leader Dick Durbin (D-Ill.), a close Obama ally. "We won't be able to save every soul here."

At least 44 states are facing budget shortfalls over the next two years totaling more than $350 billion, according to a recent survey by the Center on Budget and Policy Priorities, a liberal think tank.

In the last recession — which was mild compared to what many economists say is happening now—more than 1 million people lost health coverage as 34 states cut eligibility for public health programs, the center found.

Without the flexibility to run deficits like the federal government, state officials have been scrambling for months to cut aid to schools, universities and, increasingly, residents who rely on the state for medical care.

Nationwide, roughly 60 million low-income people use Medicaid to get some form of health care, including basic physician services, prescription drugs, X-rays, dental care and even hospice care. But some of those services are now in jeopardy.

Tribune reporter Judith Graham contributed to this report.