For 34 years, Anita Monoian has worked to bring primary and preventive health care to the people of the Yakima Valley in central Washington. Over those years, she's watched public health care gradually improve and expand as state and federal support increased, bringing care to more children, adults and disabled persons through the Yakima Neighborhood Health Services.

In recent years, however, the trend has been running in reverse. The state government in Olympia, scrambling to cover three successive years of significant budget deficits, has cut direct financial assistance to community clinics and enrollments in public insurance programs that allow Yakima's most vulnerable populations to gain access to treatment.

The Yakima Neighborhood Health Services already has cut 17 of about 150 staff and has reduced clinic hours, but more draconian measures were under review this spring, as Gov. Chris Gregoire attempted to close a $5 billion budget gap for fiscal 2012.

Cuts proposed or already approved would reduce Medicaid reimbursement rates to health centers by more than a third, eliminate public insurance programs for adults and disabled patients, and drastically cut or eliminate state grants that are used to provide care to uninsured patients.

Monoian, president and CEO of the Yakima clinic, says the results could be disastrous for Yakima County, which is home to more children living in poverty than any other in the state of Washington. Yakima County also has the highest percentage of people using hospital emergency rooms as their primary health care provider.

"There are two health care safety nets in the nation: hospital emergency rooms and community health centers," Monoian says. If the health centers have to make drastic cutbacks, it means only one thing for hospital emergency rooms.

"What we're worried about, for example, is that pregnant women are going to show up in ERs with no prenatal care at all and in labor. It's not complicated to figure out how that is going to affect birth outcomes."

$112 Billion Shortfall

The challenges facing Yakima reflect the harsh reality of the budget crisis in Washington state and throughout the country as state governments, trying to cope with decreased revenues from the worst recession since the 1930s, look for ways to make up for a 10 percent cut in tax receipts. The last three fiscal years have been grueling, but the reduced revenue caused by the economic downturn—and in some states, new tax cuts—was partially offset by one-time money from the federal government's economic-stimulus package.

That money is gone though, and according to the nonpartisan Center on Budget and Policy Priorities, fiscal 2012 will be one of state's most difficult budget years on record. When fiscal 2012 budgets were proposed in the spring, 44 states and the District of Columbia projected budget shortfalls which, combined, totaled $112 billion.

No area of state services is immune from cuts, explains Judy Solomon, vice president for health policy at CBPP. And while the protests in states like Wisconsin may appear as though certain programs have been targeted over others, Solomon suggests that states don't have many choices once they decide to solve their budget deficits through cuts.

"When you look at a state budget pie chart, health programs, along with education, are the biggest slices," she says. "I don't think there is any doubt that you're going to see them affected."

Indeed, they already have been. According to a report by Solomon's group, at least 31 states have made cuts that will restrict eligibility for public health insurance or reduce access to health care services. At least 29 states are cutting medical care, rehabilitation services, home care or other services to low-income elderly or disabled.

Adding to the crisis are state cuts to non-Medicaid mental-health care programs, which have totaled $1.6 billion over the past two years, according to the National Alliance on Mental Illness. Deeper cuts are also expected in 2012.

In Ohio, for example, expansion of eligibility for children and the enhanced federal match has led to increased Medicaid spending for mental-health and substance-abuse treatment, but that has been offset by cuts in state appropriations.

Non-Medicaid spending for these programs was cut almost $100 million in the most recent two-year budget compared with the previous biennium when county mental-health boards received about $521 million, says Susan Ackerman, public policy fellow at the nonprofit Center for Community Solutions in Cleveland.

In a recent survey by the center, prepared with the help of the Ohio Hospital Association, 88 percent of county alcohol, drug and mental-health services boards report that funding reductions have resulted in longer waits for services for consumers and 65 percent reported that non-Medicaid services have been reduced. Many counties, for instance, have cut housing benefits "and so we're seeing these patients end up in the hospital emergency rooms or the criminal justice system," Ackerman contends.

This dire scenario is playing out across the nation. Back in Washington state, where community health centers serve more than 730,000 patients annually, or more than 10 percent of the state's population, budget cuts of the kind proposed this spring severely could reduce the capacity, says Erin Hertel, government-affairs manager for the Community Health Network of Washington.

"When these cuts are all rolled up together, nearly 40 percent of the community health centers statewide anticipate having to close at least one clinic," she says. That would mean 200,000 fewer patient visits in the course of the year and possibly eliminating up to 700 staff positions at the clinics. "An impact at that size would be devastating for the safety net in Washington."

Repercussion for Hospital EDs

The alarms being raised by the community health center advocates are being echoed by hospitals and health systems both in Washington and nationwide, says Cassie Sauer, vice president of public affairs for the Washington State Hospital Association. Community health centers "are the primary care safety net across the state," Sauer says, and maintaining state funding for them is a top priority of WSHA. "The repercussions of these cuts will be felt very much by hospitals and in hospital emergency rooms."

The 150 clinics in the system are the pathway to primary and preventive care for the majority of Washington state residents on Medicaid and other public insurance programs, as well as the uninsured, she says.

"If they take big cuts and then have to reduce the services they provide, or the hours they are open, or even close some of the clinics, then that means those folks won't be getting the care they need in the community and then are much more likely to either have their health status worsen and/or end up in emergency rooms seeking care."

Community health centers are independent, locally operated nonprofit organizations that provide primary and preventive health services in a clinic setting. On the ground, they range from large urban health centers with hundreds of staff to mobile clinics that serve large, rural service areas. Nationally, about 35 percent of their patients are eligible for Medicaid. A few have private insurance. Around 45 percent are uninsured. Patients are served regardless of their ability to pay, usually based on a sliding fee scale.

The clinics serve about 23 million Americans a year and offer a wide variety of services, including prenatal care, hearing and vision screenings, dental, pharmacy, HIV testing and substance-abuse counseling. Many provide access to mental-health care, either on-site or in coordination with county mental-health boards.

In recent years, many of them have developed close working relationships with hospitals, sometimes with the support of state grants, in programs that worked to divert patients with primary care needs from hospital emergency departments and into the community clinics.

According to a report issued in April by the U.S. Government Accountability Office, community health centers have implemented three types of strategies intended to reduce ED use: ED diversion, care coordination, and accessibility of services.

By educating patients about health center services, supporting care coordination for chronic diseases and providing additional office hours to improve access, community health centers are working to prevent nonurgent visits to hospital EDs, which the GAO says cost on average seven times more.

But as the economy has worsened, support for these centers has declined—even while demand from an increasingly impoverished population has increased. State funding for community health centers has declined each year since 2008, according to an annual survey by the National Association of Community Health Centers.

The three years prior to 2008 were marked by increases in state outlays to the programs, and many states expanded coverage and increased services. In fact, Washington's public-health programs may be particularly attractive to state budget analysts looking to make cuts, because in that state, programs have expanded over the past decade to become one of the most generous in the nation. Children are eligible for Medicaid if their families are at 300 percent of federal poverty level (compared with the federal mandate of 133 percent). There is a program to cover some low-income childless adults, another for noncitizen children, and one for newly disabled residents who are not yet eligible for Supplemental Security Income.

But it isn't just the most generous programs that are being cut. States appropriated about 20 percent less for the centers in 2011 over 2010, with 23 states decreasing funding for health centers, and four states zeroing out funding for the programs. And while state support for health centers is below 2006 levels, the GAO report says that uninsured patients are showing up at health centers in record numbers—a 36 percent increase between 2004 and 2009; meanwhile, funding fell by 42 percent in the last two years.

Although community health centers tend to operate on razor-thin margins (1 percent, on average) most have been able to sustain the cuts so far without closing their doors. In California, however, six health centers closed this year, which cost 170,000 patients their access to care and left 300 staff unemployed.

One-time funds from the federal government helped keep most centers open. Over two years, stimulus spending included $2 billion for community health centers. And more federal funds are on the way. The Patient Protection and Affordable Care Act approved last year provides $11 billion in new funding to community health centers over the next five years.

Dawn McKinney, director of state affairs for the NACHC , says she knows some state lawmakers might look at those new federal funds as rationale for cutting state payments, but they shouldn't. That money, she says, is intended to promote growth in the community health systems between now and 2014, when the insurance mandated under the Affordable Care Act is expected nearly to double the number of patients served by the centers, to 40 million annually.

In Massachusetts, the state whose health care reform program was used as a model for the recently approved federal program, demand for community health centers increased substantially as insurance access increased, McKinney says.

"The vast majority of that money is for new and expanded sites, so to the extent that we're talking about keeping current health centers in operation, the state dollars are still critical."

The Medicaid Mess

Hanging over this already chaotic fiscal crisis is uncertainty about Medicaid. Supplemental federal support to state Medicaid programs, provided through the stimulus program and already extended once, is set to expire at the end of June. And some members of Congress have proposed repealing the "maintenance of effort" requirements mandated in the health-reform package. These requirements, originally part of the Medicaid supplemental appropriations, bar states from cutting back on their Medicaid rolls by adding new restrictions to eligibility.

If state governors are successful in persuading Congress to repeal those requirements, states may shed many Medicaid recipients in the coming year.

Paying for It One Way or the Other

What happens to patients who no longer can receive primary care at the community health centers? "They get sicker," says McKinney. "They get into the system later and they've avoided care and they may end up in an emergency room and hospitalized with chronic conditions. We're paying for their care one way or another—it's a matter of whether we are paying for their care in the most cost-effective way."

William Petasnick, president and CEO of Froedtert Health System in Milwaukee, agrees. Wisconsin policymakers have proposed an across-the-board cut of about 10 percent to numerous health care programs, including health centers.

"Personally I think this is the exact opposite of the direction we ought to be going. These are some of our most vulnerable populations, and in the absence of providing coverage through the community health center, they hit your emergency room." Hospitals are required to provide basic treatment in their EDs, but Petasnick says such treatment does not provide the valuable prevention programs that save money in the long run, and works against continuity of care for chronically ill patients.

Beyond those issues, hospital EDs simply are not equipped to fill in the gap for some of the programs states are cutting, Petasnick says. Examples include dental care and mental-health care, both programs being drastically reduced in state budgets.

"Mental health is becoming a huge, significant issue," he says. A once-robust community mental-health system in Milwaukee has been devastated by state budget cuts, forcing it to take in fewer patients. "The first line of care is becoming the emergency department and most of us are ill-prepared to provide the kind of care that is needed."

Regardless of what happens to state or federal funding in the near future, community health centers likely will play an expanded role in primary care in the future, says Craig Becker, a member of the American Hospital Association's board of trustees and president of the Tennessee Hospital Association.

"Hospitals and community health centers are going to have to work a lot more closely together in the future," he says. Working together on emergency room diversions is just a beginning, he says. As health care reform asserts increasing demand for tracking readmissions and outcomes for patients who are chronically ill, the community health centers are going to play a lead role.

The economic crisis is a setback, but it could be a temporary one, at the beginning of a long process. "There is no magic bullet on this thing. This is health care reform 1.0; we've got many editions to go before this is finally done."

Randy Edwards is a freelance writer in Columbus, Ohio.