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Strained health agencies eye flu’s budget impact

With the swine flu outbreak rapidly spreading, state and local health officials are  considering what effect a pandemic could have on their budgets, already due for deep spending cuts amid the lingering recession.
Image: Swine Flu preparations
State and local health officials around the nation say they feel well-prepared for a flu outbreak. Preparations include training classes such as this session on the use of protective masks being given by Karya Lustig, training manager at an Oakland, Calif., clinic, to clerks Mayra Torres, left, and Angelina Galvan.Ben Margot / AP
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With the swine flu outbreak rapidly spreading, state and local health officials are queasily considering what effect a pandemic could have on their budgets, already due for deep spending cuts amid the lingering recession.

Years of planning paid for by billions in federal dollars have put their agencies far ahead of where they were during the SARS epidemic in 2003 in terms of preparation, but the execution of large-scale vaccination, quarantine and treatment strategies could be a different story. The outbreak is coming amid an estimated total $200 billion shortfall in state budgets.

“It’s going to depend on what transpires,” said Dr. Jim McVay of the Alabama Department of Public Health, among thousands of U.S. health officials scrambling this week to keep tabs on the disease that has so far sickened more than 120 Americans in 17 states. “Everything has changed in the last five days.”

“We’re certainly spending a lot of hours right now trying to track down any cases” in Alabama, where swine flu has not yet been confirmed, McVay said. “What’s really going to be expensive is if you have to start giving out anti-virals to large segments of the population and then, of course, if people start having the illness and that type of thing.”

Across the country, in Arizona, which was added Wednesday to the list of states where swine flu has been confirmed, health officials in Pima County held initial discussions about how they might pay for a big hit to their budget, already due to be slashed in the coming fiscal year.

“We did talk this morning of the possibility of having to declare a public health emergency if we need to get state support,” said Patti Woodcock, community relations director for the Pima County Public Health Department. “We’re not there yet, but it is part of the discussions that are ongoing.”

Limited resources
In Kansas, where two cases of swine flu were confirmed as of Wednesday, the state’s secretary of health and environment wasted no time telling lawmakers that his agency would be seeking extra funding to cope with the outbreak.

McVay, Woodcock and employees of other public health agencies across the nation said they could accomplish much by moving personnel from less urgent matters to flu-related tasks.

“What you can do, and what most health departments do, is just shift resources,” said Dr. Christian Sandrock, an infectious disease specialist at the University of California, Davis, who is also a deputy health officer for Yolo County, Calif. “You’re able to shift people within the department. Where you might see funding problems is what happens if we’re still investigating people in full force in a week or a month.”

That’s what will happen in Pierce County, Wash., said Laurie Jinkins, deputy director of the Tacoma-Pierce County Health Department. However, “If we start shifting staff from (other) programs to work on this, that is going to end up being a problem for us,” she said.

“It’s not going to stop us from doing it to save lives, but it is going to create problems for us elsewhere,” Jinkins added. For instance, restaurant inspections and health outreach programs might suffer.

And Woodcock, the Arizona official, said agencies must factor into their planning the eventuality that some health care workers themselves will catch the flu and stay home.

Disaster-preparedness efforts
So far, flu-related work is not exacting an unmanageable financial toll on state and local health departments, according to sources contacted by The reason is twofold, according to Professor Glenn Melnick of the University of Southern California, an expert on health finance and economics who has studied the nation’s readiness for outbreaks of infectious diseases.

First, disaster-preparedness concerns in the wake of the Sept. 11 terrorist attacks and other disease outbreaks, along with billions in federal funding, have enabled all 50 states to prepare detailed plans for a flu outbreak that cover everything from quarantine procedures to vaccine distribution, according to the federal Centers for Disease Control.

“We’re in a lot better situation than five years ago,” said Melnick, also a senior economist with the RAND Corp. “There was nothing in place and no planning.” Those preparations are now saving state and local governments from the overwhelming expenses they would face if they had to scramble to make them as an epidemic unfolded.

“If you had to write all these documents now, it would be pretty difficult,” said Sandrock, the UC-Davis physician. “Now that we have them, we can just tweak them and send them out, and it has really made a big difference.”

Also helping forestall the financial pain is the fact that many jurisdictions that are facing huge budget cuts haven’t actually made them yet, Melnick said.

Take California, where 14 cases of swine flu have been confirmed and Gov. Arnold Schwarzenegger declared a state of emergency after lawmakers approved billions in cuts to health spending. “The cuts really have not hit yet,” Melnick said. “There’s going to be a big squeeze on the state budget, which will result in public sector cuts next year, but so far those have not hit.”

Sandrock said that even public health agencies that have been forced to cut costs already typically started with things like indigent health care and drug and alcohol treatment programs. “They obviously try to cut the least essential services,” he said. “Communicable disease control can be very essential.”

The cost of an outbreak
Sandrock said he had so far not seen much extra pressure on his state’s public health system from swine flu issues, despite the cases in California. “A lot of that, honestly, is the volume,” he said. “It’s not a big volume. If you had 2,000 cases and suspected 100 deaths, that would be a different story.”

In that case, he said, he would expect to see an effect on the turnaround time from state labs that help diagnose flu strains and other infectious diseases. As of now, “they are still unbelievably good and reliable.”

Melnick, the RAND Corp. economist, pointed out that some of the cost burden of a massive flu outbreak would be borne by health insurers and the private health system. “Most of the care people would get would be in private hospitals by private doctors,” he said. “While doctors and hospitals have been squeezed by the recession, there hasn’t been a real tightening in capacity.”

While a flu pandemic, with millions contracting the disease across the nation and around the world, would exact a heavy financial toll at all levels of government, the Obama administration and key members of Congress have vowed that there will be plenty of money to fight the threat.

Indeed, state and local officials count on any huge budget holes caused by swine flu to be filled with federal money.

“We spend a lot of time planning around this, and one of the things you plan on if something like this happens is that the governor declares a state of emergency and eventually this will be paid for with federal dollars,” said Jinkins, the Pierce County, Wash., official. Even without that assurance, “We’re not going to hold back on spending what we need to.”