States Shred The Safety Net
Source News for Social Justice Action
Date 05/08/18/02:18
States Shred The Safety Net
Dan Hawkins August 15, 2005
Dan Hawkins is vice president for federal, state and public affairs
for the National Association of Community Health Centers.

Even as lawmakers on Capitol Hill debate Medicaid reform, states are
carrying out radical changes to their own health care programs. No
lengthy political debate is involved. Nor is the public necessarily
asked to weigh in. States have at their disposal a powerful weapon to
enact Medicaid policy changes with barely a nod from the federal level
using what is called a "Section 1115" waiver. These waivers are
essentially good policy gone bad. They were originally created to give
states the flexibility to try new and innovative projects in health
care. That was the intent in 1972 when the statutory authority was
originally granted in Section 1115 of the Social Security Act, (hence
the name “1115 waivers”). Now waivers are gaining popularity in many

states as a back-door method of cutting Medicaid costs by a host of
methods, from raising premiums on beneficiaries to closing
enrollment—policy changes that require no input from Congress or the

That growing numbers of states are using waivers to trim budget costs
should serve as a cautionary tale the Medicaid critics who want to cut
first and ask questions later. Consider, for example, the state of
Tennessee, where recent efforts to overhaul TennCare—Tennessee's
Medicaid program—are pushing an estimated 2,000 people a day off the
rolls. On August 1, 2005, about 200,000 TennCare beneficiaries lost
all prescription coverage, and the coverage of another 97,000 TennCare
enrollees who are the sickest may hang in balance in the courts. Two
other states—South Carolina and Florida—are eyeing waivers that create

Health Savings Accounts that could ultimately price low-income families
out of the health care market.

Cutting the safety net strings for thousands of low-income people may
produce short-term savings, but the long-term consequences are
far-reaching for the entire health care delivery system—and signal
serious trouble for America’s community, migrant, and homeless health
centers. The federal Health Centers program, which started 40 years
ago as part of President Lyndon B. Johnson's "War on Poverty," is
already showing signs of financial strain—diminishing grant revenues,
slackening public financial support and falling revenues, amidst a
surge in the number of poor and uninsured people seeking care at the
centers for the first time. Indeed, a new report from the National
Association of Community Health Centers, The Safety Net on the Edge ,
documents that over the past five years, the number of poor and
uninsured health center patients has grown three to four times as fast
as the nation’s overall poor and uninsured populations.

Health centers are doing everything possible to keep their own costs of
care down, even as their new patients are sicker and require more
care. In fact, almost half of all health centers ran deficits last
year—the reddest of red flags for anyone who cares about the fiscal
health of the safety net. In all these respects, health centers serve
as a microcosm for the national health care crisis. The growth of
America’s poor and uninsured populations and the decline of our bedrock
private insurance industry pose serious challenges for the entire
health care system—but especially for health centers and other key
safety net providers.

Few can argue against the need to rein in Medicaid spending. But at
issue here is intent: Putting budget neutrality before public health
can trigger incalculable consequences for all. We now know that health
spending is rising faster than workers' incomes. If the cost trend
continues, health insurance will become unaffordable to more and more
people—including the middle class. Already, 12 percent of adults ages
19-64 are underinsured and thus more likely to go without essential
care, such as filling prescriptions or visiting a doctor. Congress and
those engaged in the current debate about reforming Medicaid must first
account for the cuts already in place at a time when Americans are
negotiating a marketplace of diminishing health care options. Yes, it
costs money to sustain safety net programs like Medicaid and health
centers, but any failure to do so carries with it enormous public
health consequences. As the auto mechanic warned in a famous ad some
years ago, “You can pay me now or pay me later.”

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