RI gov wants $4M cut to hospitals amid recession

AP News
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Posted: Dec 21, 2009 10:25 AM

Gov. Don Carcieri has proposed cutting millions of dollars meant to reimburse hospitals for providing health care to the poor during a recession that has cost thousands of Rhode Island residents their jobs and employer-provided health insurance.

The latest budget proposal from the Republican governor would eliminate $3.7 million in funding to four hospitals _ South County, Miriam, Westerly and Kent Hospital _ that have seen an increasing number of patients who have health insurance but cannot afford to make co-payments or pay deductibles of $1,000 or more required under their insurance plans.

"These are people who are choosing whether they can pay their mortgage or pay us," said Sandra Coletta, president and chief executive of Kent Hospital, which stands to lose $800,000 in state funding.

Her hospital tries to put patients who cannot afford their bills on payment plans, sometimes as little as $25 per month. Others it attempts to enroll in publicly funded insurance plans for the poor. Still, the charity care provided by Kent Hospital has leaped from $15 million in 2005 to $30 million last year.

If Carcieri's proposal becomes law, Kent may be forced to lay off staff, Coletta said.

Carcieri included the cut as part of a package intended to close a $220 million budget deficit for the fiscal year ending in June, a shortfall equivalent to about 7 percent of what the state expected to take in. With unemployment hovering around 13 percent, that budget shortfall could grow larger as people lose jobs and cut back on spending, which drives down state tax collections.

"Frankly, the pressure on the hospitals is likely to grow in the coming years," Carcieri said, referring to the possibility of more state cuts and the impact of a health care overhaul now being debated in Congress.

Democrats hold a veto-proof majority in the General Assembly and say they want the cuts overturned.

"It can't happen," said Rep. Donna Walsh, a Democrat who represents Westerly. "There's going to be more and more uncompensated care, and you're going to cut the payments for it?"

Several of Rhode Island's hospitals have been in precarious financial shape for years. In 2007, they pushed for legislation making health insurance companies responsible for collecting co-payments and deductibles from patients.

The legislation would also have required businesses that offer health insurance plans with high deductibles to start special savings accounts for their employees to cover costs and instituted a tax to fund more affordable health insurance plans.

While Carcieri acknowledged that community hospitals were struggling, he vetoed the legislation because he said it would raise insurance costs and make coverage less available.

Instead of changing the rules for health insurers, lawmakers in the Democratic-dominated General Assembly decided to give the hospitals $3.7 million for two years to compensate them for patients who fail to pay their bills.

Hospitals already get state funding to compensate for the cost of caring for poor people without any insurance and certain costs incurred by Medicaid patients. Those hospitals received their first payment but would lose a second payment under Carcieri's plan. Instead, the state would scoop the money to close its deficit.

"We're in very difficult times, and we're trying to tighten our belt a little bit," said Gary Alexander, secretary of the executive office of health and human services.

He described the cut as the least painful of several options that the Carcieri administration considered for reducing health care expenses. Hospitals will still receive about $400 million in state funding and can have other options such as fundraising to cover other costs.

But the cuts give hospitals little room to maneuver, said Edward Quinlan, president of the Hospital Association of Rhode Island. Hospitals and private insurers have multiyear contracts that set the price of health care services, he said. The government sets the rates it will pay for people covered by Medicaid, a health insurance program for the poor, the disabled and families with children, and Medicare, which covers people 65 and older.

Not only has the recession increased the need for charity care, it's made it far more difficult to fundraise. Westerly Hospital, for example, saw its donations drop 25 percent from 2008 to 2009.

"We can't discontinue services, we can't turn people away, we can't raise fees," Quinlan said.