California's fiscal year started July 1, but legislators have recessed until August 20 without passing a budget.  Emergency spending provisions are tapped out. What is a health care provider to do? Well, long-term care facilities have an answer: sue the state, which has missed $750 million in Medi-Cal (Medicaid) payments since the budget impasse began, according to the Sacramento Bee (registration required).

I'll let the lawyers quibble over how a provider can sue the state for not paying bills that no law authorizes the state to pay, but that observation misses the practical point: government dependency harms providers' ability to give care. In one example, the SacBee describes a man who cut his finger to the bone with a chainsaw, who arrived at a rural health clinic in Tulare County to find that "the business had closed and laid off 42 employees becaue it was not getting state Medi-Cal reimbursement".

Let's get our heads around this: the man needed medical care, and the laid-off employees undoubtedly would have preferred to be at work, but because of government inaction hundreds of miles away in Sacramento, nothing could be achieved. For long-term care providers, it is even worse: long-term costs (caring for terminally ill patients) are matched by short-term funding (annual state budgets).

The answer, surely, is to stop subsidizing providers of health care and give the money to needy patients instead. That way, as long as patients need health care, acute or long-term, providers will be ready to care for them. Furthermore, such funding needs to be "smooth" such that when patients' incomes move up and down across the Medicaid cut-off line, there is no friction segregating their own contributions from the taxpayers' as time goes by (for example, by merging Health Opportunity Accounts and Health Savings Accounts, to make use of two current tools).

Providers have become much too dependent on state dollars, and many likely find it difficult to imagine a different funding source (at least, that is their lobbying message to date). Incidents like this summer's California budget stand-off serve as a warning to providers to beware of government dependency.