Guest Commentary: A Balancing Act - PA’s state budget and the health care safety net

Kenneth J. Braithwaite, II
Regional Executive, Delaware Valley Healthcare Council of HAP
Senior Vice President, The Hospital & Healthsystem Association of Pennsylvania


Lawmakers must reconcile the need to balance next year’s state budget with the growing demands being placed on Pennsylvania’s health care safety net. The long recession and slow, jobless recovery present legislators with a challenging conundrum. At the very time when more Pennsylvanians need more safety net services, the state has less revenue available to fund them.

The number of southeastern Pennsylvanians eligible for Medical Assistance, Pennsylvania’s Medicaid health insurance for low-income adults and families, has grown quickly – up 18 percent in the last two years to nearly 700,000 in 2009.

Another 76,000 in the region relied on state-subsidized adultBasic (for adults with incomes below 200 percent of the federal poverty level) and CHIP (Children’s Health Insurance Program) in 2009. An additional 67,000 were stuck on the adultBasic waiting list.

All told, the number of southeastern Pennsylvanians with safety net health insurance or no insurance now accounts for more than a quarter of the region’s population. This is a major problem statewide as well. In 14 counties, 20 percent or more of residents are covered by Medical Assistance.

Medical Assistance is chronically underfunded in the best of times, reimbursing hospitals on average just 82 percent of the cost of the care provided to beneficiaries.

In response to last year’s economic crisis, supplemental hospital Medical Assistance payments were cut 11 percent in the 2009-2010 state budget, even though the number of beneficiaries increased. These cuts came despite the fact that the federal government temporarily increased its share of funding for state Medicaid programs.

Governor Rendell’s proposed budget for 2010-2011 again cuts hospital Medical Assistance payments. In addition, the budget relies on more than $1.5 billion that may or may not materialize, pending government action such as the extension of enhanced federal funding for Medicaid and approval for proposed tolling on I-80.

Also of concern is the projected $525 million to $1 billion shortfall in this year’s budget, the result of lower-than-expected revenues from taxes and other fees.

This year, we must prevent funding gaps in the state budget from becoming new holes in Pennsylvania’s health care safety net. Although un- and under-insured patients and their health care providers bear the brunt of these cuts, we all pay the price. Providers must cover losses from safety net services with income from investments and payments from commercial insurers.

As a result of combined underfunding by Medical Assistance and Medicare, commercial insurers in Pennsylvania subsidize over $1 billion in hospital care*, increasing costs for everyone.

To follow the development of the state budget and its impact on health care, I invite you to go to www.careforpa.org and sign up to receive updates. You can also use the site to check on pending health care-related legislation and to contact state representatives on behalf of patients and providers.

I urge you, as health care professionals, consumers, and concerned citizens, to learn more about Pennsylvania's state budget and other issues shaping the delivery of health care services in this era of reform.

* Analysis of The American Hospital Association (AHA) Annual Survey data