Tuesday, March 8, 2011

The Pennsylvania Medicaid Budgetary Squeeze

In Fiscal Year 2002-2003, I worked for the Pennsylvania Department of Public Welfare in the Medicaid Office of Budget and Planning.  Back then the State's total budget was $40 billion and Medicaid accounted for $10 billion.  The spending was in entitlement form which means that, like the prison system (the world's oldest entitlement program), when an applicant is determined to be eligible for services, the State and Federal governments must come up with the needed funds for their health care.  The Feds provide $0.55 on the dollar while each state provides the rest.  The states do have some discretion on which things are covered (unlike Medicare which is strictly administered by the federal government).

While I was there, the state was transitioning it's approximately 1.5 million recipients from a fee for service system where doctors and hospitals were paid directly by the state into a managed care system where transactions between recipients and providers were being administered by HMOs.  The rationale, as it was told to me, was that many providers would not accept Medicaid patients otherwise if they were being paid directly.  An outsiders interpretation of course is that it is just welfare for insurance companies.  The managed care move was not having the desired effect of bringing costs under control (especially prescription drugs).

These days the states and the federal government are under self imposed pressure to control their spending on social services while not raising taxes on the wealthy.  Suzy Khimm at Mother Jones magazine has a good review of current efforts at the Federal and State level to control costs by cutting back on care and playing with eligibility rules.

Medicaid Roulette | Mother Jones

The new Governor Tom Corbett R has proposed his first budget to the state legislature.  Because he has promised not to raise taxes, is constitutionally required to balance the budget, and has many of residents unemployed and not paying taxes he is forced to cut spending in Education and in Healthcare.  Most of the cuts will have to come in Higher Education and other discretionary programs which are different from entitlement programs.  His proposed budget is $27.3 billion which is far below what is was when I was there.  I do not know if that includes Medicaid or not.  Details to come.

Corbett swings budget ax at schools, colleges

**Related Posts**

Sunday, March 6, 2011

States as Laboratories and Lavatories of Democracy

As the standoff at the State Capitol in Wisconsin continues over public employees and teachers to continue to have the right to collective bargaining with no end in sight a similar bill in the Midwestern state of Ohio passed it's State Senate this week by a vote of 17-16 with protesting crowd sizes maxing out at 8,500.  According to the Dayton Daily News "The bill undoes much of the 1983 law allowing public employee collective bargaining. It bans strikes, ends binding arbitration for police and firefighters, creates a merit pay system and layoff system using criteria other than seniority."   The State House is expected to vote on the bill this week and be signed by Gov John Kasich-R (who is a former Fox News contributor).  

If one state is successful in passing this law while the other is not it will be bad for unions and workers in that state but it does present an opportunity for public policy and social science researchers to study the effects of these types of laws.  Both Wisconsin and Ohio are Midwestern industrial states of similar climate, industry, and demographic makeup.  This type of study would be called a quasi experiment (not a true experiment because the law is not randomly assigned).  A wide variety of variables could be studied as the workplace has an effect on a wide variety of quality of life issues.  The strain that public employees are under can have ripple effects throughout the state especially in times of crisis when services are needed from the State.  Even in normal times stress on the employees can have effects in their homes, on their marriages, and their kids.  If their incomes are affected so can the surrounding communities' economies. 

There is plenty of other "experimenting" going on in other states both on the left and the right.  For example Vermont is trying to pass a Single Payer law to cover everyone (see Related Post below) while Pennsylvania 42,000 adults lost health insurance due to the Adult Basic Program being ended on March 1 of this year.  In the chart on the right many states including Vermont (single payer controls costs better than private insurers) are cutting spending to below prerecession levels providing many consequences for those dependent on spending and opportunities to study the effects of these consequences.  Pennsylvania can now be added to the map in red.


Last night the Wisconsin state Senate may or may not have bended the rules and passed the law 18-1 banning collective bargaining without the quorum present.  Whether it stands or not will depend on whether court challenges to the law and/or efforts to recall Senators who voted for the law are successful.  Governor Walker can be recalled in January 2012.  This could be a different kind of experiment in democracy than what we're seeing in Ohio and other states.

The Worden Report: Protests in Wisconsin and Bahrain: Similar or Different?


Measuring Democracy in the World?


Vermont single payor | The Incidental Economist 


Variability in Health Care Survey Reports but not in Vermont's Health Care Plan