Funds are low for Medicaid, legislators told
Posted on Friday, September 5, 2008
The state’s Medicaid program is seeking $ 93 million more in general revenue next fiscal year and $ 111 million on top of that the following year because its trust fund is running out of money, a state official told lawmakers Thursday.
“Unless we get additional state general revenue, we won’t be able to operate the program as we see it now. There would have to be significant cuts,” said Kyleen Hawkins, chief financial officer for the state Department of Human Services’ Medical Services Division.
The program is budgeted to receive $ 714 million in general revenue in the current fiscal year, up from $ 670 million in fiscal 2007 and 2008, Julie Munsell, spokesman for the department, said.
The trust fund totaled $ 180 million as of Thursday compared with $ 191 million on June 30, 2007, she said. The surplus is expected to run out by fiscal 2010, which begins July 1, 2009, “although we will get an allocation during that year,” she said.
The program provides services to more than 800, 000 Arkansans, and its budget totals $ 3. 9 billion in state and federal funds this fiscal year, Munsell said.
State Sen. Percy Malone, a Democratic from Arkadelphia, told his colleagues that the 2007 Legislature voted to pay for programs partly from the trust fund instead of using general revenue because there was a significant amount of money in the fund “knowing full well that the balance was going to go down dramatically.”
“In the next session, we will not be able to tap the trust fund because it has been tapped this time, and it is not the first time the Legislature has done that,” he said.
Joint Budget Committee cochairman Rep. Chris Thyer said he doesn’t believe that there is “a magic pill to fix this problem.”
“But it is an enormous thing and the only good thing I can say about it is, is as bad as term limits are I am happy I am not coming back next session,” said Thyer, a Democrat from Jonesboro who is barred from seeking re-election under the state’s term-limits amendment.
State budget administrator Mike Stormes later said the fund, financed by a tax on soft drinks, is projected to have a $ 20 million balance at the end of the current fiscal year. The tax on bottled soft drinks, and powders or other base products is 21 cents per gallon, and the tax on soft-drink syrup or simple syrup is $ 2 per gallon, according to the Legislative Tax Handbook.
The Legislative Council’s Administrative Rules and Regulations Committee signed off on proposed rules increasing the Medicaid reimbursement rates for ground and air ambulance services and private hospitals, and added dental services coverage for people 21 and older. Thyer questioned whether department officials have calculated when the fund would run out of money.
“We have raised the reimbursement rate for ambulances, private hospitals, and we have added a new dental program, and I am not going to say that any of those things weren’t absolutely needed,” he said.
The increased rate for ground ambulance services will cost an estimated $ 2. 1 million in state and federal funds in fiscal 2009 and $ 2. 2 million in fiscal 2010, and the increased rate for air ambulance services will cost an estimated $ 4. 4 million in fiscal 2009 and $ 2. 3 million in fiscal 2010, according to a staff report to the committee.
The report said the private hospital inpatient rate adjustment will cost an estimated $ 18. 9 million in fiscal 2009 and $ 25 million in fiscal 2010, and adding dental services coverage for individuals 21 and older in the Arkansas Dental Program will cost an estimated $ 1. 6 million in fiscal 2009 and $ 10 million in fiscal 2010.
Hawkins said she’s not sure about the exact date when the fund will run out of money.
“We do get some new money in on a yearly basis, but not enough to fund the program at the current level without additional state general revenue,” she said.
Thyer said the 2007 Legislature approved the increased reimbursement rates and added the dental program in the Medicaid program budget.
Munsell said the department is seeking more general revenue for Medicaid because medical costs are expected to grow by 7. 5 percent to 8. 5 percent a year and to ensure access to Medicaid for the program’s recipients. If Medicaid providers close their businesses because the increased cost outpaces the reimbursement, that makes it harder for Medicaid recipients to receive the program’s benefits, she said.
In May, the state Department of Finance and Administration revised its general revenue forecast for the current fiscal year, trimming it by $ 106. 8 million and lowering the general revenue budget by that amount to a total of $ 4. 411 billion for the year. That’s still an increase over general revenue spending in fiscal 2008, during which the state distributed $ 4. 353 billion.
Gov. Mike Beebe has said state officials would consider raising the forecast, allowing agencies to spend more, if the state’s tax collections outpace the forecast for several months.
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