State Budget

State Fiscal Challenges Will Continue to Drive Health Care Policy in 2010

The ongoing financial challenges the state is facing come at a critical time as the federal government debates an overhaul to our nation's health care system. Those changes are expected to make positive improvements in the way people access and receive health care services, but also will require hospital changes. In addition, hospitals are working to meet requirements around health information technology improvements, and continue quality and patient safety initiatives. Community health care needs also continue to place demands on hospital services. All of these activities require resources. 

Because part of the state budget includes Medical Assistance payments to hospitals, and other state support for specific health care services, the hospital community must pay close attention to any proposals to cut hospital funding in the 2010-2011 budget. It's a critical time for you, as a member of the hospital family, to understand the issues and ways you can help send messages to elected officials when the next budget is proposed by the Governor.

Challenges

In 2009, in the midst of a severe economic downturn, state government was collecting less money than expected. This revenue shortfall made passing the 2009-2010 state budget especially difficult because lawmakers had to first find the money to fill that existing shortfall of $3.2 billion. The strong voice of Pennsylvania's hospital and health system community helped to restore most of the hospital payment cuts proposed in that budget, which, at one point, totaled $280 million. On October 9, Governor Rendell signed the General Appropriations Act of 2009 (House Bill 1416) into law. However, as of press time, one of the supporting bills has not been enacted because of ongoing debate over proposed "gaming legislation." It is the seventh year in a row that Pennsylvania lawmakers and the Governor did not meet the June 30 deadline for passing the state budget.

Since October 9, new gaps have emerged for 2010 as revenues have fallen short of the projections on which the 2010 budget was based. Current estimates show a year-end revenue shortfall of $450 million. If the proposed gaming legislation does not generate $250 million this year, the projected revenue shortfall will be even larger. The Governor is expected to release Pennsylvania's next budget in February, and if revenue declines persist as expected, additional spending and service cuts could be likely.

Your Role

Look for the next edition of Understanding the Issues, and follow the updates about the Governor's 2010-2011 budget proposal and its impact on the hospital community. You need to be ready to speak out against hospital funding cuts to ensure Pennsylvania's hospitals and health systems can continue to meet patient needs, implement health care reform changes, and make advancements in care.