Beebe Drops Budget Hints, Says Medicaid Shortfall Crisis Postponed

Gov. Mike Beebe (D) used his weekly radio address to spell out several budget proposals, including hope that a Medicaid crisis may be delayed for another year.

Speaking about the upcoming fiscal session, which starts in February, Beebe said only K-12 education and critical needs are likely to see a budget increase.

“The state’s general-revenue budget will again be tight, and operations budgets for most state agencies will remain flat,” Beebe said.  “With a small increase in revenue being forecast, I will propose a funding increase in K-12 education to ensure our continued push for excellence and compliance with adequacy requirements. Beyond that, we will examine other areas where the demand for government services has continued to increase.”

In early December, state revenue forecasters left unchanged the current year’s forecast for fiscal year 2012 at $4.567 billion, 0.1% decrease. They also lowered their growth forecast for fiscal year 2013 by nearly $121 million. Still, they project a 3.5% increase in revenue collections in the state’s next fiscal year.

MEDICAID BUDGET CRISIS POSTPONED
Beebe noted that a looming budget crisis for the state’s Medicaid program is not likely to impact the state budget in the upcoming fiscal year — a change from previous predictions.

Earlier this year, Beebe said that Medicaid could face an $87 million shortfall in the next budget year, which begins July 1, 2012, and a $220 million deficit in the following year. The projected fiscal crisis has led Beebe to push for a change to the state’s Medicaid delivery and payment models.

In today’s address, Beebe said that fiscal year 2014, which begins July 1, 2013, is a more likely timeframe for Medicaid to become problematic.

“One area we’ve been watching closely is Medicaid. Rising health-care costs and a struggling national economy continue to increase demand for Medicaid services, and soon our state budget will be unable to keep up with that demand. We now believe we will have sufficient Medicaid funding for the coming fiscal year. But our improved national standing for per-capita income means that federal matching funds for Medicaid will be decreased. The result is a projected Medicaid shortfall in the hundreds of millions of dollars by fiscal year 2014,” Beebe said.

“That is why we want to begin instituting our payment-reform initiatives for Arkansas health care in 2012. What began as an idea to curb rising Medicaid costs has become a system-wide effort to better control health-care costs while improving quality of care. Working with health-care providers, consumers, insurance companies and federal officials, we are concentrating on specific areas of care to improve the system. These include bundling payments, eliminating duplications of expensive tests and placing a strong emphasis on results. This effort could position Arkansas as a national innovator in developing state-led solutions in health care.

2012: A BUSY POLITICAL YEAR
Beebe also suggested that 2012 would be a “busy and contentious” election year, full of political rhetoric that voters should be cautious to buy into.

“While voters will hear many ideas and promises from candidates, I encourage you to ask thoughtful questions about the real-world impact of campaign pledges,” Beebe said. “New programs often require new revenue, which can mean higher taxes. And cost-cutting ideas and lower taxes can have a very real impact on state services and job growth.”

Thanks to once-a-decade redistricting, all 135 House and Senate legislative seats will be up for grabs in 2012, as will Congressional offices, judicial races and a host of local elections.

Beebe added, “We can all work together to improve our state, but those improvements are best made through pragmatic debate and solutions, not heated rhetoric and impractical promises. I look forward to better years continuing to lie ahead for Arkansas in 2012 and beyond.”