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Counties Warn That Budget Plan Could Bankrupt Some Hospitals

Elected leaders from the nation’s county governments lobbied Congress on Wednesday to change a provision of the balanced budget agreement that they say would bankrupt public hospitals serving the poor.

Members of the National Association of Counties (NACO) said proposed five-year budget cuts in Medicaid would fall particularly hard on urban hospitals, leaving local property taxpayers to pick up the difference.

“The consequences are devastating,” said Michael Hightower from Atlanta, a Fulton County commissioner and NACO’s president. “It’s a major issue.”

The five-year balanced budget plan recently agreed to by the White House and Congress calls for a savings of $16 billion in the Medicaid health insurance program serving the poor.

County leaders said 85 percent of those savings, or $13.6 billion over five years, will be taken out of a Medicaid program for hospitals serving disproportionately high numbers of Medicaid patients, called DSH.

Under the DSH program, states receive extra Medicaid money to be disbursed to public and private hospitals that serve high numbers of poor patients.

For example, in 1996 DSH payments to Hightower’s home state of Georgia totaled $369 million, with $228 million funded by the federal government and the remainder by the state, according to the Health Care Financing Administration (HCVA).

Commissioner Peter McLaughlin of Hennepin County, Minn., said property taxes in communities supporting public hospitals will go up.

Critics have charged that the DSH program gives states too much flexibility, allowing some to abuse the program and use the money for totally unrelated projects, such as roads and bridges.

NACO officials said that, at the very least, Congress should tighten up the DSH program requirements and ensure that hospitals with truly high levels of poor patients receive the money they need.

“When you have a state with a financial problem and they see a pot of money, they are going to grab it,” said Jane Campbell a Cuyahoga County commissioner in Ohio.