Budget meant tough decisions, including hospitals.
Just like in Washington, these warnings fell on deaf ears. Also like Washington, the Democrats' response was more spending, more taxes and more borrowing.
However, here in New Hampshire, we know that we cannot continue down that path. Republicans campaigned across the state that we would not raise taxes, but scale back the massive government expansion that increased state spending by 25 percent over just two budgets. We have kept our word.
One group in particular feeling the effects of necessary cuts to deliver a fiscally responsible budget has been the state's largest hospitals. They are a perfect example of how the state's irresponsible spending over the last four years means painful reductions now.
Over the past biennium, the state's Medicaid program received $161 million in federal stimulus funds. This additional funding simply expanded a system that truly needed reform, but instead was allowed to grow at an unsustainable rate.
However, just like here in New Hampshire, the federal government could not maintain its reckless spending, and these stimulus funds stopped on July 1, the same day the new budget took effect. That left an enormous hole in the state's Medicaid budget.
To make matters worse, states can no longer scale back Medicaid rolls to adjust the program to meet our budget situation. The national effort to have the federal government control our health care has tied the hands of New Hampshire leaders to control Medicaid, the largest program in state government.
Given the massive federal cut in Medicaid money and the new restriction on the state's ability to manage the program, the Legislature had three choices available. The first was unacceptable--raising taxes to cover these costs would have sent our economy into a spiral and delivered a crushing blow to our fragile recovery.
That left two options: slashing Medicaid rates to cover the loss of federal dollars, or find funds from elsewhere in the budget to move into Medicaid to plug the hole.
Ultimately, the current budget took the third option, one that Gov. Lynch included in his budget. The state budget moves $157 million over two years into the Medicaid program from the uncompensated care fund to fill the massive gap of lost federal funds. We did this because it was more important for the state to keep its commitment to the poor and disabled that are covered under Medicaid than to continue to provide the state's largest hospitals with funding for their bad debt, unpaid care and other unreimbursed costs.
What's important to remember is that the state will keep supporting uncompensated care costs for the small, rural hospitals of the state, called critical access hospitals. The larger hospitals are better able to manage the loss of uncompensated care. As Gov. Lynch pointed out, they had cash surpluses of over $200 million despite engaging in $500 million in new construction in recent years. They have expectations of always--increasing state funding, but in these difficult times, they can absorb their bad debt for two years.
While this has certainly not been an easy process, the state has ensured services for the neediest while producing a fiscally responsible budget that will position New Hampshire for the future.
Rep. William O'Brien, R-Mont Vernon, is speaker of the New Hampshire House. Lynne Ober, R-Hudson, is vice chair of the House Finance Committee. Neal Kurk, R-Weare, is chair of Division III of House Finance, which oversees health and human services spending.
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|Title Annotation:||STATE BUDGET|
|Author:||O'Brien, William; Ober, Lynne; Kurk, Neal|
|Publication:||New Hampshire Business Review|
|Date:||Aug 12, 2011|
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