Growing Medicaid Budgets Squeezing Out Other Priorities

E-newsletter Issue #86 | Feb. 16, 2012

Drop into any state capitol budget conversation and you are sure to get an earful about Medicaid. 

Maine policymakers had to fill a $120 million shortfall in the current year Medicaid budget before they could move on the shortfall for 2013. The state could run out of money to pay its Medicaid bills as early as mid-April.

Among the fixes proposed by Gov. Paul LePage is eliminating coverage for 65,000 people. Some have called his recommendations draconian. 

LePage defends his position, saying Medicaid can no longer provide a “free lunch” to poor 19- and 20-year-olds or to healthy adults caring for others. 

“We have encouraged people to rely on the taxpayers, rather than rely on themselves,” the governor told Stateline

Last week, the House Appropriations Committee agreed on a compromise solution to the shortfall. While it made some cuts to Medicaid, including eliminating eligibility for about 18,000 people, a great part of the budget-balancing plan relied on money from other state agencies and borrowing $60 million from the 2013 budget. The committee proposal is counting on paying back the money with expected savings in Medicaid.   

In a Feb. 7 letter to the legislature, LePage objected to the legislative proposal.

“This problem needs to be fixed, and it must be fixed within the Department of Health & Human Services. Medicaid cannot continue to cannibalize state government, and sacrifice other agencies to pay for welfare,” he wrote.

Legislators in Colorado believe they have lost choice in their budgeting process. Health and human services take one-third of the budget and education takes a second third, leaving little discretion for the Joint Budget Committee considering the state’s budget. Colorado expects to spend $5.4 billion on Medicaid in 2013, with the state’s share increasing by 11 percent over the current year, according to theDenver Post.  

Delaware lawmakers, too, are faced with managing a runaway Medicaid budget. Last year, the Joint Finance Committee rejected proposals to impose patient copays or cut payments to doctors and hospitals. This year may not be much different. 

Some legislators seem to be reluctant to take action in an election year, but Senate President Pro Tem Anthony DeLuca is calling for action.

“If there’s a serious issue out there, you don’t get to duck it until next year,” he has said.

Meanwhile, Gov. Jack Markell is exploring Medicaid cost-containment ideas that don’t require legislative approval. 

A new CSG analysis finds that spending by the states on the health insurance program for elderly, disabled and low-income adults and children is now the largest piece of state budgets. The Medicaid program grew from 21.9 percent of all state expenditures—including all state and federal funds—in 2009 to 22.3 percent in 2010, and was expected to grow to 23.6 percent in 2011. 

State-only spending for Medicaid still lags behind primary and secondary education—17.4 percent for Medicaid compared to 35 percent for K-12 education in 2011. The CSG analysis allows states to compare themselves and their Medicaid spending to other states in their geographic region and to more meaningful regional averages rather than national averages. 

The CSG analysis of Medicaid spending in the Eastern region confirms that the proportion of the budget that Maine spends on Medicaid, 28.6 percent of all budget funds, is only behind New York and Pennsylvania.  Outside the Eastern region states, only Florida, Missouri and Tennessee spend a greater portion of their state budget on Medicaid than Maine.     

CSG Medicaid Resources:

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