Scissors to the Safety Net

California has just 73 “safety net” hospitals, the big public and private institutions that maintain trauma centers for victims of accidents and violence and also treat people who have no health insurance. Both jobs are costly, and the safety net hospitals are frayed by underfunding. The 10 private hospitals that provide trauma care in Los Angeles County lost $17 million last year.

Last week, the situation got worse. Bush administration officials told Gov. Gray Davis that California will have to absorb two large cuts in federal Medicaid payments, the hospitals’ key funding source. The cuts are part of a planned $17-billion trim from Medicare and Medicaid, ordered in part to help pay for the administration’s costly tax reductions.

The Davis administration blames the Bush administration for “promising help and not delivering.” However, the first big hit that California will take--a cut in Medicaid funding that will kick in next fall--can’t be blamed just on lack of love between Sacramento and Washington. The $400-million reduction in the $17 billion a year the state gets to treat people eligible for Medicaid is the result of a formula that is based not on the number of poor people but on a state’s per capita income. California’s Medicaid-eligible population grew by more than 700,000 last year alone, so if anything it should be getting more dollars. But because the state’s per capita income soared in the late 1990s, thanks to Hollywood and Silicon Valley billionaires, Washington has deemed California less needy of federal help in 2002.

The second cut, to be phased in over several years until it reaches $300 million a year, is more overtly political and affects only the safety net hospitals. The Bush administration official who oversees Medicaid and Medicare, Health and Human Services Undersecretary Tom Scully, says he is ending “the single biggest scam in the history of the federal government,” a Medicaid rule that has let states submit inflated bills to Washington for services provided by their safety net hospitals. Some states, rather than using the extra cash to help poor people get medical care, have transferred it to their general funds.

In fact, what Scully calls a scam has long been a legitimate tool to compensate underfunded hospitals; in the early 1990s, for example, the state’s Republican governor, Pete Wilson, used it to prevent trauma hospitals in Los Angeles County from collapsing. By all accounts the state has put every penny of its extra cash into health care for poor people.

California’s punishment for the sleazy accounting of other states and for falling afoul of a thoughtless Medicaid spending formula will be greater misery for the poor--and perhaps loss of lives.