Slumping economy hurts health system, but stimulus provides some relief

The receding economy has dragged down Michigan's health care system, "offering a preview of how a lingering recession could corrode Americans' hospitals, savings and health," the Wall Street Journal reports.

"The erosion of Michigan's gold-plated health benefits, long the envy of workers across the U.S., is accelerating the state's downward economic spiral. Years of auto-industry layoffs and benefit cuts to white-collar retirees have left hundreds of thousands of Michigan workers... without employer-provided health coverage. To adapt, individuals are drawing down savings to fund their own insurance, going without treatments or tests, or leaning on an increasingly strained state. The share of Michigan residents under 65 using public insurance such as Medicaid rose to 22% last year, from 11% a decade earlier. These cutbacks, in turn, are devastating the health-care sector." Providers in the state are losing money and hopes have dwindled that the heath care system will be able to absorb the slack of uninsured and unemployed from the car industry's decline (Linebaugh, 7/13).

In Massachusetts, Boston Medical Center, is bracing for a major financial loss which will force it to cut services to the poor, The Boston Globe reports: "The hospital projects that it will lose $175 million in the fiscal year starting Oct. 1, an 18 percent operating loss that is unusually large even in Massachusetts' up-and-down hospital industry. The hospital estimates that it will close this year $38 million in the red, its first loss in five years. "Ironically, hospital officials blame the downturn partly on changes ushered in with the state's groundbreaking mandatory health insurance law, which Boston Medical Center supported and that benefited many of its patients. As part of the law, the state phased out special subsidies for hospitals that treat large numbers of poor patients, a significant shock for Boston Medical Center" (Kowalczyk, 7/12).

But there is good news -- community health centers are being bolstered by more than $1.1 billion in federal stimulus money made to expand services to the poor, the Wall Street Journal reports in a separate story: "The centers, which offer primary care and other coverage free or at reduced prices based on patient incomes, will be able to serve 2.8 million new patients this year, thanks to funding distributed in March from the stimulus package that Congress passed earlier this year, according to the Department of Health and Human Services. That money includes $155 million for the construction of 126 new health centers and $338 million to help 1,100 centers expand services or keep longer hours, says Mary Wakefield, head of HHS's Health Resources and Services Administration" (Zhang, 7/12).