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GOP Budget: Less Medicaid, More Cockroaches and Amputations

My latest column for Kaiser Health News:

Los Angeles—I'll never forget the first time I visited the St. John's Well Child and Family Center about seven years ago, because it's the first time I heard about a grisly intruder pediatricians sometimes find in young children's ears: Cockroaches.

It's a problem endemic to poorly maintained, low-income housing, of which there is quite a lot in the South Central neighborhood surrounding St. John's. And it's one reason the staff there are so aggressive about confronting the health hazards of their patient population. Instead of merely treating problems like asthma, lead poisoning and, yes, insects crawling into the ear canals of sleeping children, St. John's also offers home environmental assessments—complete with instructions for tenants on how to clean up hazards and, where possible, to pressure slumlords into fixing dilapidated properties.

St. John's was a more modest enterprise back then: just a handful of clinics operating on a shoestring budget. When I returned last week, I could see it had grown. Thanks to a combination of philanthropy and increased federal funding, under both the Bush and Obama administrations, it has expanded to 10 clinics with an annual budget of $25 million, serving a predominantly Latino and African-American population in what remains one of the nation's most medically under-served communities.

And the future seems more promising still. The Affordable Care Act will pump more money into these clinics, both directly by giving them subsidies and indirectly by giving more of their patients insurance. At the same time, the law provides incentives for providers that offer integrated care, which St. John's is in position to do. It's long been what the experts call a "medical home," establishing long-term relationships with patients and tending to their health, rather than simply their illnesses. Now it's working with other clinics and local hospitals to develop a fully coordinated, multispecialty network of care—or what the experts, and the health overhaul, call an "accountable care organization." The result should be medical care that is, at once, more comprehensive and more efficient.

But none of that will happen if the congressional leaders of the Republican Party and their supporters get their way. Not only have they vowed to repeal the health law, taking away its clinic subsidies and massive expansion of insurance to low- and middle-income Americans. They have also voted, via the House Republican budget, to dramatically reduce funding for Medicaid.

A new estimate from the Kaiser Family Foundation suggests that, if fully implemented, the House Republican budget would reduce Medicaid enrollment nationally by between 14 million and 27 million people. (Kaiser Health News is an editorially independent program of the Foundation.) That's above and beyond the 17 million who would not get Medicaid because the Republicans would also repeal the health law. And while conventional wisdom suggests Republicans will not succeed fully in either endeavor, the latest signs from Washington suggest the Republicans could very easily extract significant Medicaid reductions before the budget negotiations are over.

What would that mean for a clinic like St. John's? I put that question to longtime director Jim Mangia, who responded by sketching out its finances. As a federally qualified health clinic, St. John's gets extra payments for every Medicaid patient it sees. This is by design: It's meant to subsidize care for the uninsured, who generally pay very little or nothing at all. And that's precisely what happens at St. John's. Medicaid patients are about 30 percent of the patient mix but 40 percent of the revenue. "It's our best payer, our bread and butter," Mangia says. And if the clinics' Medicaid population shrinks, the clinic's revenue will shrink with it.

Mangia refused to speculate on how he and his staff would respond, but it seems likely they'd have to reduce spending somewhere, particularly since the state of California is already contemplating major Medicaid cuts. And, as I walked around the clinic, I didn't get the impression that downsizing would be easy. The facility I saw was clean but hardly lavish. The big investments, such that they were, seemed to be standard equipment and a new electronic medical records system. In its public filings, Mangia said, St. John's reports an operating margin of just 2 percent.

At one point, Mangia mentioned St. John's had started offering its patients podiatry. That sounded a bit superfluous—is bunion care really a taxpayer responsibility?—until Mangia explained the rationale. It seems clinic staff see many diabetics with severe, untreated foot problems, because of poor circulation. But Mangia said the county's public hospitals, frequently the uninsured's only option for specialty care, generally have a six- to nine-month waiting list for treatment—and patients end up requiring amputations before they see specialists. "My doctors came in here, and said we can't in good conscience keep referring these folks to the county," Mangia explained. The clinic ended up hiring two podiatrists. Mangia isn't sure the investment saved the clinic dollars, but he estimates it saved about 750 limbs in the last year.

Clinics like St. John's have a way of finding their ways through financial crises. Mangia, who is obviously a gifted fundraiser, could try to lean more heavily on philanthropy. But the cuts that Republicans are proposing and that Washington is contemplating are too large to be offset with donations. The medical safety net of clinics and hospitals would inevitably end up offering fewer services or seeing fewer people, even as the withdrawal of Medicaid coverage forced more low-income Americans to seek charity care. "It'd be disastrous," Mangia says. I'm inclined to take his word for it—and you should be, too.

This column is a collaboration between TNR and Kaiser Health News. KHN is an editorially independent news service and is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization, which is not affiliated with Kaiser Permanente. The California-based reporting for this column was done in conjunction with the foundation's Media Fellowships Program.