Health Funds Crisis, Part II

Five years ago, with considerable fanfare, the Clinton administration rescued Los Angeles County from bankruptcy and averted a public health crisis. The county’s top-heavy and expensive hospital-based health system was granted a $1-billion waiver of federal Medicaid rules, allowing it to be reimbursed for smarter and cheaper preventive outpatient care at clinics rather than just for inpatient hospital days. It amounted to a huge demonstration project that could have been a model for the nation. Now, with that waiver set to expire in just 20 business days, the bloom is off the rose.

Today the economy has recovered and the state is wallowing in budget surplus. But the county has no similar cash overflow; it’s desperate to get the federal waiver renewed before it expires June 30, freezing all health services department hiring and contracts. At risk is the health of 2.8 million county residents who lack private health insurance and depend on the county for medical care.

Blame for this unnecessary drama can be laid not only on the county but also on the state and the feds. Now, at least, federal officials have agreed to meet with county and state counterparts to work out a way to avert a major decline in health services. Under the waiver agreement, the county is required to submit quarterly and annual progress reports to the federal Health Care Financing Administration and to the state Health Services Department.

The federal waiver must be extended, despite the county’s failure to enact a number of promised money-saving reforms, because too much misery will result if it isn’t. However, Washington is right to demand that the county and state bear at least some of the cost. The county must do more to reduce its costs and speed the switch to preventive health care from acute emergency care, and it must be willing to kick in a share of the cost. County officials say they are prepared to give up $60 million of their share of the state tobacco lawsuit settlement.

The state, made flush by the booming economy, hasn’t even offered to match the county’s $60 million, less than half of 1% of the state’s $13-billion surplus. State officials also delayed forwarding the county’s tobacco money proposal to the federal government and canceled a meeting with federal and county officials in Washington in April. And the state’s health officials never entered negotiations with county and federal officials to work out a way to streamline antiquated and duplicative paperwork and eligibility for patients.

The alternative to renewal of the waiver? Workers with contagious, untreated diseases; children attending school with sick classmates who could have been treated but weren’t; longer waits at emergency rooms clogged with people with basic, primary health care needs who no longer have a clinic to go to; rising hospital costs passed on to taxpayers.

The county reacted badly from the beginning. Given a generous federal bailout, officials began to treat that money as a regular part of their budget, making few plans for the day when it might be reduced or even lost.

Next, county health officials, when they went back to the well this year, actually upped their request to more that 400 million federal dollars a year over five years, a politically suicidal increase that the county supervisors have since taken off the negotiating table.

Perhaps President Clinton and Gov. Gray Davis’ administration had an interest in seeing the county sweat a bit, but enough is enough.

Davis has set his priorities for the state’s huge surplus: education and transportation. But some reasonable measure of that can and should be used to help out Los Angeles County. The federal waiver was supposed to allow the county to try new community-based approaches to health care that could set a national model; the county health plan has fallen short of its own goals but has made some progress in expanding outpatient care, achieving less reliance on more expensive hospitals and reducing overhead. There is a limit to what the county can do on its own. Ongoing state and federal involvement is essential.

If the federal brinkmanship can be set aside, and if the county and state quickly come to terms on shouldering a fair portion of the cost, Los Angeles County’s huge uninsured population can retain the publicly provided care it needs. Washington, Sacramento and Los Angeles officials would do well to remember that the bureaucratic lines that separate them don’t matter to uninsured sick people.