Virginia’s hospitals are going to be facing some tough economic challenges in the very near future.
The budget cuts that Gov. Tim Kaine has proposed for Virginia regarding Medicaid could be devastating for our health care and could jeopardize the access and quality of care that patients receive. The proposed cuts are being added onto a burden that hospitals are already carrying, from below cost of care payment rates, the state budget reductions from 2008 and the current economic recession.
Nine percent of the patients at Culpeper Regional Hospital are covered by the Medicaid program. In 2008, the Medicaid inpatient payments for hospitals were cut from 78 percent of actual costs to 75 percent.
The most recent proposal from the governor’s office is to cut the inpatient payments down to 70 percent of actual costs, which would be the lowest payment rate in more than a decade.
Since Medicaid reimbursement rates are already well below the actual cost of care at 75 percent, hospitals and other health care providers are being forced to shift more costs onto insured patients and the employers who pay for health insurance.
Now with the recession hitting all Americans hard, the private sector is not doing well and businesses are struggling. These businesses are having to reduce benefits and layoff large portions of their work force. People are losing their jobs, which increases Medicaid enrollment and causes hospitals/health systems’ charity care and bad debt to rise, which in turn could cause service reductions and job losses in health care facilities.
The governor’s budget proposes an increase in Virginia’s cigarette tax to fund $155 million for the Medicaid program, which the Federal Government matches on a dollar for dollar basis, so that would ultimately be $310 million that would go to Medicaid.
If this tax is rejected and another funding source is not identified, hospitals and other health care reimbursement rates could drop to 50 percent of cost.
While the tobacco tax may not be the long-term solution to the funding crisis, it would be a short-term fix that is necessary to sustain the program and keep the reimbursement rates at a vital level.
Virginia’s tobacco tax is one of the lowest in the nation and smoking and other tobacco products account for more than $400 million annually in health care expenditures.
If this user fee or tax results in reduction of tobacco use, there will be an improvement in our populations’ health and less dollars spent on expensive health care.
The Medicaid program is essential for Virginia’s most vulnerable citizens, which includes the elderly and disabled, and our children. Especially now — during tough economic times —it is critical that this population, and all Virginians, have access to quality health care in our communities. These proposed budget cuts will put that access into serious jeopardy.