LITTLE ROCK — Arkansas’ rapidly approaching $298 million Medicaid shortfall can be attributed largely to the state’s economy, which has performed better than that of most other states, Gov. Mike Beebe and public health officials said Tuesday.
“No good deed goes unpunished,” Beebe said at a news conference at the state Capitol. “Because the percentage of what we have to pay versus what the fed pays is directly related to how well we’re doing economically, the better we do, the more we’ve got to pay. ... I just wanted y’all to recognize that.”
Since Beebe took office in January 2007, the “federal match,” or the amount of the state’s $5 billion Medicaid program that is paid by Washington, D.C., has fallen from 73.37 percent to 70.17 percent.
That means that the state shoulders more of the burden of paying for Medicaid, which covers about 780,000 people. The state’s share has risen to nearly 30 cents of every Medicaid dollar during Beebe’s tenure.
The political irony is that the Medicaid deficit — likely to be the most contentious issue during the state legislative session in January — was mostly caused by the state’s relative strength compared with its counterparts nationwide during the past four years of recession and sluggish growth, said Beebe’s spokesman Matt DeCample.
The state’s Revenue Stabilization Act — under which spending authority is cut if tax revenue falls short of projections — and a cautious Legislature that lived within its means before the recession, gave Arkansas a bigger economic cushion when the economy crashed in 2008, while other, less cautious states “fell off the cliff,” De-Cample said.
“It’s an ironic reward, but that’s how the system works,” he said.
Beebe has recommended that the state contribute $90 million in general-revenue funds and an additional onetime $70 million from the general improvement fund to reduce the expected shortfall to $138 million in 2014.
But sometimes lost in the political rhetoric regarding the Medicaid deficit is how the state arrived in the red, the state’s Medicaid director, Andy Allison, told a group of reporters last week.
For much of the recession, federal stimulus funds masked the problem. Arkansas — like the rest of the country — received a temporarily elevated rate of federal financing for Medicaid, which covers diverse segments of the populations, including the disabled, some of the elderly, pregnant women and lower-income children.
For most of 2010, at the height of stimulus spending, Arkansas received an 81.18 percent match. But when the stimulus funds ran out, the match started dropping quickly, down to 71.37 percent in July 2011.
That drop-off translates into real money, said Allison, with each percentage point drop in federal support for Arkansas’ Medicaid program representing about $50 million that the state needs to come up with to support the program.
“That alone explains the vast majority of the $298 million financing shortfall,” Allison said.
The formula that determines the federal match is based on each state’s per-capita income and is measured against the per-capita income of the other states, Allison said. The match rate changes annually. From 2000-08, the state’s match ranged between 73 percent and 77 percent, according to state Department of Human Services data.
Less federal money is just one of many “moving parts” in the rapidly changing Medicaid system, said Joe Thompson, the state’s surgeon general.
Thompson spoke Tuesday in Little Rock at the Clinton School of Public Service and advocated for expanding the state Medicaid rolls by 250,000 people.
Medicaid expansion is an option for each state under the Patient Protection and Affordable Care Act, which offers 100 percent federal financing for the expansion until 2017. By 2020, the state would pay 10 percent of the costs.
State Rep. Bruce Westerman, a Hot Springs Republican, said it’s not clear to him that decreasing federal support equals a vibrant state economy, but rather shows that Arkansas hasn’t been as badly hit by the hard times of recent years. Still, he said, “it changed our ranking.”
The way the system works is fair, Westerman said.
The expanded Medicaid match — which would stay at 90 percent after 2020 unless Congress changes the law — wouldn’t affect how the state pays for its current Medicaid recipients, whose care would continue to be supported at 70.17 percent until October 2013, when the new federal fiscal year begins.
The complicated funding mechanism isn’t well understood by the public, Thompson said.
These “are some of the mechanics that we are now starting for the first time to have a complete discussion around. I think it’s important for the public to know,” Thompson said.
And a falling match rate does have a silver lining, Thompson said. After all, it does reflect a relatively strong state economy.
“That also means we have relatively more resources available to us,” Thompson said.
Information for this article was contributed by David Smith of the
Arkansas Democrat-Gazette.
Front Section, Pages 1 on 11/28/2012