Maryland Budget Shortfall for Medicaid, Health Programs Exceeds $500 Million

Legislative budget analysts on Oct. 23 said that Maryland faces a more than $500 million shortfall in Medicaid and other health programs, the Washington Post reports. In FY 2001, which ended June 30, Maryland amassed a $184 budget deficit, mostly as a result of increased Medicaid costs (LeDuc, Washington Post, 10/24). The figure includes a $173 million Medicaid shortfall and an $11 million deficit in mental health programs (Washington Times, 10/24). Budget analysts also predicted a $337 million deficit, including $284 million in Medicaid costs, for FY 2002 (Washington Post, 10/24). Mental health program spending will account for $20 million of the projected deficit, while an additional $33 million will cover state-mandated funding for the state Developmental Disabilities Administration (Washington Times, 10/24). The figures, reported by the Maryland Department of Legislative Services to the state House Appropriations Committee yesterday, "were the bleakest yet" that lawmakers have received as they prepare for a "brutal session dominated by painful budget cuts." Under state law, Maryland must have a balanced budget. Budget analysts blamed the deficit on "spurious assumptions" state officials used to estimate Medicaid enrollment. Officials predicted that only 428,000 residents would be enrolled in Medicaid during FY 2002, although 440,000 had already enrolled at the time of the estimate. By September 2001, Medicaid enrollment had "swelled" to 457,000.

'Aggressive' Measures
Debbie Chang, Maryland's deputy secretary for financing, said that the state Department of Health and Mental Hygiene has developed a number of "cost-containment measures" to reduce the shortfall. The plan includes increased oversight of the most expensive drugs used by Medicaid beneficiaries and more "aggressive" monitoring of the length of hospital stays (Dresser, Baltimore Sun, 10/24). However, Del. Howard Rawlings (D), chair of the state House Appropriations Committee, "chided" department officials over their lack of "solid estimates" of the plan's projected savings. "You're not telling us anything," he said (Washington Post, 10/24). He added, "It's not clear whether the department has in place the cost-containment measures to address" the shortfall (Baltimore Sun, 10/24). For further information on state health policy in Maryland, visit State Health Facts Online.