AAC
F a m i ly F r i e n d s
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The budget, Medicaid shortfall, expansion
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Medicaid at the center of several critical decisions
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udget hearings are under way in Little Rock as we prepare for next year’s legislative session. As we discuss how best to spend your taxpayer money on state services for the next two years, Medicaid often becomes part of the conversation. There’s good reason for this, as the future of this health-care program is at the center of a number of important discussions.
We also have an opportunity to save state tax dollars through a federal expansion of Medicaid. While this Hon. Mike Beebe expansion would add about 250,000 Governor of Arkansas Arkansans to the program, most of whom are the working poor, the federal government would pay the entire cost until 2017. A small state share would then kick in, First, some basic facts. Medicaid is paid for with federalsteadily rising but topping out at 10 percent in 2020. For this and-state tax dollars. It provides health care for about 800,000 upcoming biennium, some Arkansans. The majority of programs paid for by the Medicaid recipients are children state or requiring the 70and seniors, but services are 30 split would instead be also available for citizens who covered entirely by the federal fter two years of planning, Arkanare disabled, blind or pregnant. government. This would save This differs from Medicare, us an estimated $128 million sas began putting our paymentwhich provides primary health in general revenue over two care for Americans age 65 years. However, there must be and older. Seniors receiving reform initiative in place this month. It is an political consensus on Medicaid Medicaid benefits are usually in expansion in the legislature, nursing homes or require other otherwise we could not unprecendented undertaking to rein in healthlong-term care. appropriate and spend those federal funds. care costs while also improving care.
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Historically, the federal government has covered 75 percent of Medicaid costs, with Arkansas paying the other 25 percent. However, our recent improvement in per-capita income has changed that formula, increasing Arkansas’s share. Starting this next fiscal year, that obligation moves to 70 percent federal and 30% from the state. Because of that shift and the continued overall increase in health-care costs, Arkansas faces a shortfall in our Medicaid budget next July, most recently estimated at about $350 million. To balance our future state budgets, we must address this shortfall. We’ve already begun to do that through our state-wide effort to change how we pay for health care and by getting costs under control. After two years of planning, Arkansas began putting our payment-reform initiative in place this month. It is an unprecedented undertaking to rein in health-care costs while also improving care. While we believe that this initiative will eventually create significant savings, and could serve as a model for other states to replicate, we have begun on a smaller scale. This initiative will not fully address our immediate Medicaid shortfall. COUNTY LINES, FALL 2012
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As our state economy continues to recover from the national recession, our growth will create new ongoing revenue to help address the Medicaid shortfall. There is also bipartisan consensus to use some of our state’s budget surplus to provide one-time Medicaid funding. All of these potential sources of additional Medicaid support may not resolve the shortfall completely. In the current political climate, the only other viable step will be cuts in some programs. If it comes to that, we will work with the legislature to minimize the impact of any such cuts. This is the hard work we do to keep our budget balanced and to preserve Arkansas’s tradition of fiscal responsibility while taking care of all of our citizens.
Mike Beebe The Honorable Mike Beebe Governor of Arkansas 13
