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Higher costs could be unintended consequence of deep cuts

Eliminating home care, adult day care and other state services is likely to push recipients into more expensive programs, experts say.

July 19, 2009|Michael Rothfeld and Evan Halper

SACRAMENTO — Irene Steinlage has trouble walking, getting dressed, making her bed, taking a bath. She has stayed in her Folsom home with the help of a health aide, one that Gov. Arnold Schwarzenegger says the state can no longer afford.

The governor's plan to take away such care is meant to save money. But it could end up costing California more by forcing the 85-year-old, who has Parkinson's, osteoporosis and other ailments -- and thousands like her -- into nursing homes.


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"I couldn't possibly afford a nursing home," Steinlage said. So the state could be saddled with a Medi-Cal tab that is triple the cost of her home care worker, who receives $10.40 an hour five days a week.

As the governor and legislative leaders race to cut programs to plug a $26.3-billion deficit, advocates and experts say that eliminating some services will push people who rely on them into costlier alternatives.

It is a matter of constant debate in budget negotiations: Do those costs ultimately leave the public paying more than they would if taxes were raised to keep the services intact?

Administration officials say tax hikes would further damage the economy, push revenue down and drive businesses and entrepreneurs out of the state, in addition to forcing California to reduce services even further.

"As much as we believe those cuts will result in greater expense down the line -- especially in healthcare -- we have to do it because I can't promise the people something we don't have," Schwarzenegger said in a recent interview on KXJZ-FM (90.0) in Sacramento.

He says California can no longer afford to provide services that are far more generous than other states offer. Administration officials also say it is just as likely that the cuts would force people like Steinlage into a relative's home -- where the state does not have to pay for care -- as it is that they would move to a state-funded nursing home.

Others say the experience of governments that have closed gaping deficits with deep program cuts suggests that the price of doing so is hefty.

"It's pay now or pay later," said Nicholas Freudenberg, who co-wrote a study of the long-term effects of service reductions made in the aftermath of New York City's fiscal crisis of 1975.

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