Beebe reviewing budget options on Medicaid shortfall

In about two weeks, Gov. Mike Beebe (D) will present his balanced budget to the Arkansas General Assembly, but balancing a potential $400 million Medicaid shortfall will be a tough act.

Beebe tells Talk Business that he foresees two pots of money helping to shore up the Medicaid deficit, but it won’t close the gap completely.

“I think we’ll be able to give them [Medicaid] two more pots of money,” Beebe said on Wednesday (Oct. 31). “One is some increase in general revenue, which is ongoing money which is what you want. But we’ll have to give them some one-time money, which as you know, I don’t like to do, but sometimes you have to do for temporary purposes and to fill gaps.”

Beebe said the one-time money will come from last year’s $145 million budget surplus. He has also emphasized that he does not see a tax increase as a viable option to generate more Medicaid revenue.

The Governor also said that he doesn’t expect the injection of funds to be enough to bridge the expected shortfall. He has asked the Arkansas Department of Human Services and its Medicaid division to examine all areas of the program for potential reductions in services, not service closures.

Still, Beebe said, he’s not sure what the final result will be at this juncture.

“I’ve asked the Department [of Human Services] — who have better folks to make those kind of judgments — to take the approach, rather than eliminating programs, if they can avoid that, but cutting perhaps frequency or cutting a number of programs a little bit rather than eliminating just whole ones,” Beebe said. “I don’t know if they’re going to be able to do that or not. They’re still working on that.”

Beebe’s budget blueprint provides the framework for the General Assembly’s state budget, which has priorities outlined in the Revenue Stabilization Act that requires revenue and spending to remain in balance.

Beebe has advocated for the state to take advantage of federal government dollars from a potential Medicaid expansion as allowed by the federal health care law. According to state Medicaid director Andy Allison, the expansion could actually save $372 million or more over a seven-year period if Arkansas opted in.

Beebe has also enacted reforms to the state’s Medicaid payment system to move payments from a “fee for service” model to a “managed episodic care” structure. Projections from those savings have not been provided.

GOP lawmakers have been skeptical of the Governor’s payment reform initiative and the potential Medicaid expansion. They have urged Beebe to slow down the reforms for further study.