THE IMPACT OF ENTITLEMENT PROGRAMS ON RURAL HEALTH
An Issue Paper Prepared by the National Rural Health Association-May 1995
The entitlement programs are among the most misunderstood parts of the federal budget. For example, many people are surprised to learn that the "welfare" everyone is so anxious to reform is only 1 percent of the federal budget. The correct name is the Family Support Program, of which the only eligible recipients are low-income families with children. The Commodity Credit Corporation, which provides income support to farm families, has a budget that is $500 million dollars more than the Aid to Families with Dependent Children "welfare" program.
WHAT ARE THE ENTITLEMENTS?
"The Largest Entitlement Programs," CRS Report for Congress, by Kenneth Cahill was released April 15, 1993. This report is a concise, six-page, objective description of the entitlement programs. In an effort to briefly summarize the report, the following data is presented.
Federal Outlays by Budget Enforcement Act Category-Fiscal Year 1993
(All percents are of the total mandatory and discretionary budget items.)
DEFINITION OF SOCIAL WELFARE PROGRAMS
There are two categories of social welfare programs.
NINETEEN LARGEST ENTITLEMENT PROGRAMS
Following are the 19 largest federal entitlement programs listed starting with the largest program (no. 1).
SICK PEOPLE ACCOUNT FOR MOST HEALTH CARE SPENDING
There is a dangerous myth in the United States that blames the increases in health care spending on the fact that because people have health insurance and are not wise consumers of care, they overuse services driving up the amounts spent on health care. In truth, numerous studies show that very sick people use most of the health resources and it is increases in the costs of these services-medical inflation-that is driving up health care costs, not individual behavior.
What does Medicaid Spending Buy?
A report published in Spring 1995 by the Kaiser Commission on the Future of Medicaid, Health Needs and Medicaid Financing, reported that although three-quarters of Medicaid recipients are low-income families and children, two-thirds of the spending is for the elderly and disabled. Following are examples of where Medicaid funds are going-the percentages listed total more than 100 because some recipients receive benefits from more than one category.
Fewer Than One-half of the Most Expensive Patients are Elderly
Another myth is that the elderly drive up the costs of the health care system and that we should limit or ration care to the elderly. The reality is that most health care spending is used by a very small part of the population-the seriously injured or very ill. Following are findings of a study conducted by the Agency for Health Care Policy and Research (AHCPR) that looks at 60 years of medical expenditures.
|Top 5% of Health Care Users||52%||43%||50%||58%|
|Next 45% of Users||41%||53%||46%||39%|
|Remaining 50% of Users||7%||4%||4%||3%|
* Source: Montheit, et al., Health Affairs, Spring 1993.
THE DISPROPORTIONATE IMPACT OF ENTITLEMENT CUTS ON RURAL COMMUNITIES
Any and all entitlement cuts will hurt rural communities for the following reasons.
Rural health care providers, especially hospitals, are more dependent on payments from entitlement programs than urban providers. It is common for rural hospitals to be dependent on Medicare for up to 70 percent of their incomes.
THE NATIONAL RURAL HEALTH ASSOCIATION POSITION ON ENTITLEMENTS
The National Rural Health Association will maintain a flexible position on entitlements so that it can negotiate within the current political climate. However, because of the disproportionate impact of any cutbacks in rural America, the association will respond quickly after even minor adjustments to the entitlement programs are proposed. Any slower response to entitlement legislation would not serve as advocacy for the association's membership.
Following are policy positions accepted by the National Rural Health Association.