Wednesday, Nov 7, 2012
Governor Suggests Possible Medicaid Reductions
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LITTLE ROCK - The state Medicaid program may have to scale back delivery of some services, the governor said in press interviews.
Medicaid officials have warned that the program faces a potential budget shortfall of $250 million to $400 million next fiscal year. During the 2013 regular session the legislature will make the final determination on the budget of the Medicaid program.
The governor has asked officials at the state Human Services Department to try to avoid complete elimination of any programs, and instead to explore the possibility of reducing the frequency that services are available to eligible Medicaid recipients.
In preparation for the session, lawmakers are holding budget hearings at the Capitol. A starting point for serious budget negotiations will come when the governor's administration presents a proposed balanced budget on November 15.
In the same interview, the governor said that the state can add money to the Medicaid budget in two ways. The first is by allocating new revenue that has resulted from growth in the Arkansas economy and thus in the total amount that the state collects in taxes. The second source would be last year's surplus of $145 million. He said he generally prefers not to spend "one time" money such as a budget surplus to ongoing expenses such as Medicaid costs, but sometimes it is necessary.
The governor said a tax increase to bolster Medicaid is not a good option.
Medicaid subsidizes health coverage for the poor, the elderly and people with disabilities. Payment comes from the state and federal governments, with the federal government contributing about 70 percent this year. Combined state and federal spending this year will be about $4.5 billion in Arkansas.
Balancing the Medicaid budget for the next two fiscal years is expected to be the most difficult funding issue facing legislators in the 2013 session. One problem is the anticipated shortfall of up to $400 million.
Another issue will be whether to expand Medicaid under the federal health care reform act. Initially, the federal government would pay for 100 percent of the costs of making an additional 250,000 Arkansans eligible for Medicaid. The state would gradually assume a share of the costs until 2021, when the state would be responsible for 10 percent of the costs of the expansion.
There are other pressing needs for state revenue, and every day during budget hearings legislators hear requests for funding. Public defenders have made the case for additional personnel. Institutions of higher education requested more state aid last week, in order to keep up with enrollment growth and to possibly avoid increases in tuition and fees. The state Correction Department, which operates prison units, must securely supervise a consistently growing number of inmates.
Public schools from kindergarten through grade 12 will get an increase in funding of between $56.6 million and $78.4 million. Those amounts represent increases of 1.8 to 2.5 percent in school funding. Analysts for the legislative Committees on Education have determined that an increase in spending within those parameters is needed to keep education funding in Arkansas constitutionally adequate.