Ark. Human Services head warns lawmakers that Medicaid program could face big deficit in 2012

Ark. official: Medicaid could face deficit in 2012

LITTLE ROCK, Ark. — The state Medicaid program will face a huge budget deficit by fiscal 2012 without an infusion of cash, the head of the Arkansas Department of Human Services told legislators Thursday.

The department, which handles Arkansas’ Medicaid health care program for the poor as well as other public assistance programs, has been able to avoid any major cuts thanks to federal stimulus money, agency Director John Selig said. But that that won’t continue, he said, unless there is an infusion of $500 million once the dwindling state trust fund runs out. The agency’s proposed budget for fiscal 2011, which starts July 1, is $7.5 billion.

“We feel we already cut out all the fat,” Selig said, adding that many businesses that provide services to DHS clients say they are not being paid enough.

Selig said the agency could make cuts in the number of medical visits some clients are allowed or perhaps lower the number of prescriptions the program will cover.

Selig told the Joint Budget Committee that 775,000 of the state’s 2.8 million residents receive some sort of Medicaid benefit over the course of a year, with 650,000 people on the rolls at any one time.

Legislators are having budget meetings in advance of a fiscal session of the General Assembly that starts Feb. 8, and they tried Thursday to grasp where DHS would spend its money in the next fiscal year. House and Senate committees will further consider the budget once the session convenes.

Selig said most residents who receive Medicaid benefits are children, through the ARKids program, but the majority of the costs are for caring for elderly people. The agency covers the cost of two-thirds of births in the state and three-fourths of all nursing home care, he said.

The numbers don’t suggest it, but it is difficult to qualify for Medicaid, Selig said.

“Just being poor right now doesn’t get you on Medicaid,” Selig said. Recipients have to be “dirt poor.” The proposed DHS budget anticipates $4 billion in federal money next fiscal year. That is likely a greater portion of the agency’s budget than it seems, because the $7.5 billion proposal includes more than $1 billion in items that likely won’t be funded.

Overall, DHS reaches 1.3 million Arkansans annually. The agency handles a wide range of services, including food stamps, youth detention, assistance for the disabled, weatherization and the Ms. Senior Pageant.

For Medicaid, the state receives $3 from the federal government for each $1 it puts into the program. The match would rise to $19 federal dollars for each state $1, under the Senate health reform bill, Selig said. There would still be added state costs, but he said an improving economy would increase tax revenues and help the state meet the costs.

The agency has about 7,500 full-time employees.

Also before the committee on Thursday was the Arkansas Health Department, which has a $652 million proposed budget. The agency runs the state’s 94 health units and has at least one health unit in each of Arkansas’ 75 counties. The offices are sources for primary health care for many residents, and the agency runs its mass vaccination programs through the clinics.

Health Department director Paul Halverson and other officials explained the proposed budget is about $200 million greater than what the agency requested, so the appropriations would be ready if federal economic stimulus money or other funding comes through.