01/24/2012 02:48 pm ET Updated Mar 25, 2012

Austerity Measures at the Expense of Our Health?

America's system of government was designed by the founding fathers to be frustrating. During that time, the English King ran a tight ship: without internal checks on the monarch's power, things were efficient, but a bit unfair. Topping the U.S. colonials' list of grievances? Imposition of "taxes... without Consent," suspension of "(the) Legislatures," and "sen(ding) hither swarms of officers to harass" the colonials (see Independence, Declaration of).

The remedy, besides the Declaration and War of Independence, is hard-coded into the U.S. and State Constitutions, and is designed to frustrate the executive branch's authority to act without any checks by balancing power out among three branches of government.

That system is working as intended in California and Florida, where the judiciary are putting the brakes on executive and legislative branches' proposed cuts to Medicaid. At issue are reductions in Medicaid reimbursements to pharmacists, physicians, hospitals and other health-care providers that one court has found would result in "serious irreparable injury" to programs serving low-income populations.

Medicaid, not to be confused with Medicare, is the U.S. federal health program for qualifying people and families with low income. Funding for the program is shared between the federal and state governments, but is administered at the state level, with various requirements tied to federal funding.

At the heart of the issue is a federal requirement called the "equal access" provision -- a law requiring states to set Medicaid healthcare providers' reimbursement rates at levels that will ensure an adequate supply of providers. In plain English: if the government cuts healthcare providers' reimbursement rates too much, those doctors, pharmacies and hospitals will be dis-incentivized, and will stop providing services to Medicaid patients. That represents a real risk of fewer services, and would disproportionately affect low-income seniors, children and adults, many of whom are African Americans, Hispanics and other minorities.

The competing, also-important issue is budget -- both state and federal. Tax revenue is necessarily a scarce resource, and the central responsibility of elected officials is to choose among often incompatible priorities, leaving unfunded programs and disappointed constituents. By design, the judiciary's role in the budgetary process is intended to be distant, until and unless it is convinced that the cuts go against the law.

And so the courts have begun stepping in. In recent weeks, courts in Florida and California have put the brakes on proposed cuts to Medicaid reimbursements. In the Sunshine State, the state agency for Health Care targeted reimbursement rates for facilities serving the developmentally disabled, with the state going beyond cuts approved by the state legislature. Quickly responding to a lawsuit filed by 19 healthcare providers and a "John Doe" 56-year old disabled patient, the court blocked the cuts pending further review.

Likewise, in California, Medi-Cal attempted to save over $600 million by cutting reimbursement rates. Given recurring budgetary crises in the state, one can sympathize with the need for austerity. But the California Hospital Association filed a lawsuit, and a federal court agreed, saying that there was "substantial evidence that numerous... providers would reduce their capacity or shutter their doors" -- exactly the outcome that Medicaid's equal access law seeks to prevent.

The question of whether the administration-supported Medicaid cuts go too far is related to a case currently before the U.S. Supreme Court, Douglas v. Independent Living Center of Southern California, in which states and the Obama administration argue that the conditions that the federal government ties to Medicaid funding are "coercive." If the Court agrees, states may be allowed to set their own rules. Greater flexibility, yes, but this would effectively neuter the federal "equal access" law, permitting states to go even further in slashing reimbursement rates and thus services to the poor.

The combination of austere budgets and slashed reimbursement rates appear to be throwing the issue of whether Medicaid's equal access provisions will survive, and if so, in what form, to the courts. At least for now, the message from the bench is: if policies go too far in limiting at-risk populations' access to health care, we will step in to protect underserved populations.