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Budget Deficits Might Force Some States To Reduce Health Care Funds

Armen Hareyan's picture

A number ofstates face large budget deficits, "forcing some governors to come up withcreative -- some say risky -- budget gimmicks to find new sources of cash"to pay for health care and other programs, the Washington Post reports. At least 13 states facelarge budget deficits for the next fiscal year, and about 12 others faceserious financial problems, according to various estimates, reports fromgovernors and a survey conducted by the Center on Budgetand Policy Priorities.

According to the Post, because most state constitutions do notallow budget deficits, "legislatures convening for their 2008 sessionsmust make painful decisions about what programs to cut or which taxes to raiseto close the gaps." For example, in California, which faces a $4.6 billionbudget deficit that could increase to $14 billion by the end of FY 2009, Gov.Arnold Schwarzenegger (R) has proposed a 10% reduction in funds for all stateprograms -- such as Medi-Cal, the state's Medicaid program, and Healthy Families, the state's version of SCHIP -- in FY 2009,the elimination of cost-of-living adjustments and other reforms to address theissue.

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Meanwhile, some states -- such as New York, which faces an estimated $4 billionbudget deficit; New Jersey, which faces an estimated $3.5 billion deficit; andMassachusetts, which faces an estimated $1.5 billion deficit -- have considered"one-time budget gimmicks to raise badly needed cash to finance some of theirfavored long-term projects," the Post reports.

"Some say the problem is overspending by state governments," and"new governors in particular ... came into office with a list of plans toimplement and promises they want to keep," such as a proposal by New YorkGov. Eliot Spitzer (D) to expand health insurance to more children in thestate, the Post reports. Nicole Gelinas, a senior fellow with the Manhattan Institute, said, "They try to get more and morecreative financially, but all of this can't replace budgetaryresponsibility," adding, "At some point, the checkbook has tobalance. At some point, they'll run out of things to securitize or selloff" (Richburg, Washington Post, 1/13).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.