By Tim Bonfield
The Cincinnati Enquirer

Cutting $1 billion from Medicaid might help balance Ohio's budget, but hospital executives say it would hurt poor people while costing hospitals in Southwest Ohio about $48 million in the next three years.

"Everyone in Ohio should care about this. It affects the entire community," said John Prout, president and chief executive of the TriHealth hospital group and chairman of a statewide task force of hospitals concerned about Medicaid cuts.

Today, Ohio Gov. Bob Taft is expected to announce about $140 million in cuts just to balance the fiscal 2003 state budget, which ends June 30. Looking ahead to the next two-year budget, Taft has proposed cutting $1 billion from Medicaid to help cover a projected budget shortfall of about $4 billion.

Medicaid provides health care and nursing home coverage to more than 1.6 million Ohio residents, including low-income mothers and children and the aged, blind and disabled. Proposals to cut Medicaid have prompted intense lobbying campaigns from hospitals, doctors, nursing homes and advocates for the poor.

In January, Taft proposed freezing Medicaid rates paid to hospitals and other providers, dropping about 30,000 people from the program, and eliminating dental, mental health and vision care coverage.

While voicing sympathy for the difficult budget situation lawmakers face, hospital executives warned Tuesday that cutting Medicaid would be a short-term budget fix that could result in even worse long-term problems.

Whether eligible for Medicaid or not, people will get sick, Prout said. Once they get sick enough, they will show up at hospital emergency departments, which by law cannot turn them away. But care provided through emergency rooms instead of doctor offices often costs too much and comes too late.

The human toll: more miscarriages and premature babies born to pregnant women who couldn't afford prenatal care, more complications from chronic diseases, even more people being passed over for jobs because they couldn't afford to fix their bad teeth.

The economic toll: slower hiring and less buying by hospitals, which rank among Greater Cincinnati's largest employers and biggest purchasers of goods and services.

Overall, Medicaid accounts for about 14 percent of adult hospital revenue. Just freezing Medicaid rates - instead of providing a 2.9 percent increase - would cost Hamilton County hospitals nearly $23 million, according to the Ohio Hospital Association.

The effect would be worse for Cincinnati Children's Hospital Medical Center because Medicaid accounts for about 38 percent of its patient revenue.

"The Medicaid budget in Ohio is one that hits us so much at our core that we cannot just let it go as just another cut to absorb," said Lynn Olman, president of the Greater Cincinnati Health Council.

Still, hospitals wouldn't be complaining so loudly if Medicaid were their only source of income trouble.

Hospital balance sheets have been stung by the declining stock market, which was a major source of extra income in the 1990s. They've facing renewed cost-cutting pressure from private health plans and employers. And last fall, Congress allowed cuts to the federal Hospital Care Assurance Program to take effect - resulting in losses nearly equivalent to the proposed Medicaid cuts.

The HCAP program pays hospitals that provide unusually high levels of care to the poor - because for years Medicaid payments haven't really met hospital costs. Reduced HCAP payments will cost Butler County hospitals more than $3 million, and the only hospital in Adams County more than $400,000.

The dismal outlook for government health programs was a major factor in a recently revised economic forecast from the Health Alliance of Greater Cincinnati. If nothing changes, that forecast projects a $60 million loss in revenue by 2006, dropping the six-hospital system from about $20 million in the black to about $40 million in the red.

Facing such grim news, it comes as no surprise that hospital executives criticize a state law that requires annual 6.2 percent rate increases for nursing homes.

"It's a fairness issue. If hospitals have to take a freeze, is it fair to give an increase to the nursing home industry?" said Ron Long, chief financial officer for the Health Alliance.

Longer term, however, hospital executives say policymakers should rethink the entire relationship between Medicare and Medicaid.

Part of the problem is that there is one Medicare program but 50 different Medicaid programs, said Ken Page, a senior vice president with Mercy Health Partners.

Congress could help states by making the Medicare program pick up more senior care costs, such as drug coverage for poor seniors and a larger share of nursing home costs.

The federal government also could slow Medicaid spending on nursing home care by creating tax incentives for families to care for elderly parents at home.

And as unpopular as the concept may be, Prout said Congress should reconsider Medicare coverage for wealthy seniors, which in turn could make more money available to cover care for the poor.

E-mail tbonfield@enquirer.com