Medicaid changes could prove to be "Bad Medicine for Colorado"

Colorado could lose 3,500 jobs and nearly $135 million in wages if the Medicaid cuts proposed by the Bush administration go into effect.

And the loss of new business activity would equal $381 million, according to "Bad Medicine for Colorado," a report released by Families USA.

"There's an economic multiplier effect," said Ron Pollack, executive director of the nonprofit organization. "The regulation will cause serious and quantifiable harm to state economies. And the effect it will have on the people in the state is truly tragic."

The seven regulatory changes will cut $157.4 million in federal money from Colorado's Medicaid program. The net effect after five years will be a loss of $787.2 million.

Families USA said that the reduction will have a ripple effect throughout the economy, starting with a loss of jobs in the health care industry, and expanding to retail and other sectors.

"People will see their checks cut, jobs eliminated," Pollack said.

The Bush administration proposed seven regulatory changes last year that will, in effect, cut the federal contribution to states by a total of $50 billion during the next five years. Medicaid is a state-federal "partnership." The federal government matches every dollar that states spend for Medicaid.

On May 25, hospitals face a cut in disproportionate share payments, which are designed to help hospitals that provide coverage to the indigent, underinsured or uninsured. Physicians who accept Medicare or Medicaid will see a 10 percent reduction in physician fees starting June 30.

Other regulations will cut funding for school-based health care, rehabilitation reimbursement and outpatient clinics inside hospitals.

The House passed a bill Wednesday to block the regulations for a year.

"This is different from the administration's other efforts (to cut Medicaid funding)," Pollack said. "It's different because they're using regulations defined by CMS (Centers for Medicare and Medicaid Services), and aren't going through Congress."

Sen. Ken Salazar, who participated in a conference call to highlight the findings of "Bad Medicine," said he was concerned about the "regulatory assault" on the nation's "safety net programs."

"Hospitals will be affected by the cuts, especially those that provide services to people without insurance," he said. "Frankly, this will jeopardize some hospitals' ability to continue as an institution."

Salazar said he is part of a bipartisan effort to pass a one- year moratorium for all seven regulations.

"That way, the new Congress and new president will have time to figure out what they want to do, how they want to continue funding," he said.

Salazar said 60 other senators have joined to co-sponsor legislation to stop the changes, despite President George W. Bush's threat of a veto.

"The Bush Administration's ill-conceived alterations of the Medicaid system will have a drastic affect on Colorado's entire safety-net," said U.S. Rep. Diana DeGette, vice chairwoman of the Committee on Energy and Commerce, which decides health care policy. "The Families USA report offers another chilling perspective that these regulations would severely harm our state. With our economy stumbling and health care costs rising, we cannot afford another blow to our local economy as hospitals face the real threat of closing their doors."

Colorado will have two choices if the regulations are implemented -- particularly in light of Gov. Bill Ritter's pledge to increase the number of children enrolled in state Medicaid programs, said Denise de Percin, executive director of Colorado Consumer Health Initiative.

"If the bill to increase the number of people who are eligible for state Medicaid passes and is signed by Gov. Ritter, then the benefit package will be less," she said. "That's the only way to do it -- either you lower the number of people you provide services to, or you cut the services available."

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