States Worry They May Not Receive Expected Medicaid Money, Prepare Contingency Plans

The Boston Globe: "Governor Deval Patrick signed a $27.6 billion spending plan yesterday for the budget year that begins today, slashing funding for services across state government, including public education, dental care for the poor, and developmental services for toddlers. ... Patrick said he would work to preserve a program that provides stripped-down health plans for 24,000 legal immigrants, but only for the next six months. He said he will cover the remainder of the year if Congress approves a boost in Medicaid funding that has been stalled for months. The Legislature had cut the immigrant program entirely in its budget. By 2014, the program is expected to be restored as part of the national health care overhaul passed earlier this year" (Bierman and Levenson, 7/1).

The (Raleigh, N.C.) News & Observer: "Democrats celebrated the state's new $18.9 billion budget with a public signing ceremony Wednesday," but Republicans have been critical of the lack of a plan by Democrats "on how to cope with the increasingly likely possibility that the state won't get half a billion dollars in federal Medicaid money. Lawmakers and [Gov. Bev] Perdue faced an $800 million revenue shortfall brought on by the recession. That problem would grow worse by another $519 million if Congress fails to deliver federal Medicaid money the budget anticipate." The budget includes a contingency plan in case those federal funds don't come through that offers "prioritized list of actions" the state would take to meets its budget. First, officials would use reserve funds. "It gets progressively worse. Medicaid provider rates would be cut, the state would slash its contribution to the state retirement system, and then spending would be cut by 1 percent across the board" (Niolet, 7/1).

The Connecticut Mirror: For lawmakers in Connecticut, the prospect of federal Medicaid funding cuts is "causing heartburn." That's because "Gov. M. Jodi Rell and state lawmakers assumed, when crafting the 2010-2011 budget, that Congress would steer about $266 million to the state to help cover the cost of that program. That money is now in jeopardy. The Senate last week tried to pass a pared-down package that cut the state Medicaid funding nearly in half, but even that trimmed package failed to pass" (Shesgreen, 7/1).

KRQE: New Mexico is counting on "$160 million in federal stimulus money to cover Medicaid costs" for more than 500,000 state residents but that enhanced federal funding is now in doubt. "Now state leaders warn they may have to gut the program. Here's the problem: if congress doesn't pass a bill to help states with their soaring Medicaid costs, New Mexico won't get the $160 million it's banking on. If the state doesn't come up with that money, it'll lose more than $400-million in federal matching funds. The state could try to find $160-million from other agencies and transfer it to Medicaid." But if that can't be found by November, state officials will begin notifying enrollees of the cuts (Herzenberg, 6/30).

The concerns about Medicaid cuts are already being felt at hospitals too. The Miami Herald looks at Jackson Health Systems, where officials say the loss of enhanced federal Medicaid payments could deepen its "already desperate financial problems -- not only this year but next. The total loss could be more than $75 million over the next 12 months -- a huge hit for a system that was already expecting to lose $80 million to $100 million this year, even after serious cuts in staff and services. ... Earlier this year, the Florida Legislature had agreed that if the extra Medicaid money came through, Jackson would get $50 million." In addition, hospital officials say they expect to lose "another $2.3 million a month in other enhanced Medicaid payments" (Dorschner, 6/30).