Kaiser Daily Health Policy Report Rounds Up Recent Action on Governors’ Budget Proposals

The following summarizes recent budget proposals released by governors, highlighting health care spending.

• Maryland: Twenty-three percent of the spending in the budget proposal released Jan. 15 by Gov. Parris Glendening (D) would go toward health care items, the Washington Times reports (Hyslop, Washington Times, 1/16). Overall, the $22.2 billion budget increases current spending by 2.7%. Under the plan, the state's Medicaid program would receive an additional $367 million to cover a budget shortfall. Of that amount, $140 million would cover the current Medicaid budget deficit (Nitkin/Libit, Baltimore Sun, 1/16). Despite the increase, Medicaid will still be underfunded by $70 million next year, the Times reports (Washington Times, 1/16). The remaining $227 million would go toward spending increases for next year, including $50 million to boost Medicaid care provider reimbursements (Nitkin/Libit, Baltimore Sun, 1/16). That proposal is based on an evaluation of Medicaid by the state health department and is meant to "assure the program attracts and retains enough participating doctors" (Salganik, Baltimore Sun, 1/16). Glendening's budget plan also includes $25 million for mental health services and $9 million for drug treatment services in Baltimore (Nitkin/Libit, Baltimore Sun, 1/16).
• Florida: The budget proposed Jan. 15 by Gov. Jeb Bush (R) would restore about $450 million in cuts made in December to various social services programs, the St. Petersburg Times reports (Ulferts, St. Petersburg Times, 1/16). Faced with a $1 billion state budget shortfall, state legislators in December cut about $146 million in health and social services spending (Kaiser Daily Health Policy Report, 12/7/01). Spending on health and human services would increase "overall" in Bush's budget plan, but the proposal in part restores cuts to Medicaid. The budget proposal also factors in an increase in Medicaid beneficiaries' copayments, a move expected to save the state about $29 million if approved by the federal government (St. Petersburg Times, 1/16).
• Idaho: Gov. Dirk Kempthorne (R) released a budget plan last week that includes measures designed to save the state about $15 million on the program, the Spokane Spokesman-Review reports. As part of that effort, Kempthorne has proposed requiring "special authorization" for Medicaid beneficiaries who use more than four prescriptions per month. In addition, patients must use all of their medication before refills will be dispensed. Kempthorne's budget proposal calls for Medicaid spending increases of about 6%. The budget plan also calls for an expansion of Healthy Connections, the state's Medicaid managed care program (Russell, Spokane Spokesman-Review, 1/10).
• Virginia: In his first address to the General Assembly, Gov. Mark Warner (D) provided an outline of his budget plan, which relies on the state's planned use of the Medicaid loophole, the Washington Post reports (Melton, Washington Post, 1/15). Under the loophole, states pay city- or county-owned care facilities more than the actual costs of health services, receive additional matching funds from CMS and then require the facilities to return the extra state funds. The states sometimes pay the facilities a small fee for participating and use the extra federal funds for both health and non-health programs (Kaiser Daily Health Policy Report, 10/10/01). Former Gov. Jim Gilmore (R) had included the funds that the state would gain from using the loophole in a "formal revenue estimate" that will be used to complete the state's amended budget (Kaiser Daily Health Policy Report, 11/26/01). During the state's recent gubernatorial campaign, Warner called the loophole plan "questionable," saying that the additional funds "should be used for health care purposes" only (Kaiser Daily Health Policy Report, 11/19/01). As the state faces a $5 billion budget shortfall over the next 4.5 years, Warner proposed using half of the state's $934 million "rainy day fund" to balance the books for the current fiscal year. Warner also called for "across-the-board" spending reductions of 3% this fiscal year and cuts of 7% and 8% in each of the next two fiscal years. These cuts are expected to impact services for the "most vulnerable" in the state, including those with mental illnesses (Hardy, Richmond Times-Dispatch, 1/15). During his address, Warner also called for an expansion of FAMIS, the state's CHIP program (Drummond, Washington Times, 1/15).