Kentucky Medicaid Crisis Looms, Options Narrowing

by scrosby on February 4, 2009

Kentucky’s Medicaid costs are skyrocketing. With unemployment numbers growing daily, thousands of Kentuckians are joining the Medicaid rolls each month. The government health care program had already projected a budget shortfall. But that gap has become much larger than estimated. WFPL’s Stephanie Sanders reports.

Medicaid is broad program. It covers children who in foster care, people who are in mental hospitals, residential living for the disabled and nursing homes. It is also available for residents living at a certain poverty-level. And that’s where its ranks are growing.

“In times like this, too, the Medicaid program is the true safety net of our society,” says Medicaid Commissioner Elizabeth Johnson.

Her department had budgeted for the program’s rolls to increase each month this year by 1,000 people. And even then, there was a projected deficit of $183-million. But instead of 1,000 new members a month, about 3,000 Kentuckians are joining Medicaid each month.

Johnson says it increases the program’s costs by about $12-millionevery month. The new budget shortfall estimate for Medicaid is nearly $232-million.

“We have to deal with this deficit before the end of the fiscal year,” says Johnson, “and I wish we had a big bang for our buck, but there aren’t any.”

For agencies that receive Medicaid benefits, like Cedar Lake Lodge and Residences in Louisville, funding has been stagnant for the last few years, while costs continue to rise.

“We are actually eroding away any quality components and enhancements that once existed in the program,” sasy Cedar Lake President Jim Richardson. “We are down to bare bones.”

The demands on the system are growing, but there’s no funding to meet those needs. Lawmakers could be forced in the current legislative session to make program cuts or alter eligibility requirements.

Richardson says such cuts would endanger that ‘safety net’ that is critical in tough economic times.

“There are those people that are on the edge that you just may push off the ledge,” says Richardson. “And I think society has to take a cold, hard look at itself, before they start doing that in a sort of uncaring way.”

“Well, I don’t think the goal is to make cuts in terms of eligibility, services… those sorts of things,” says State Senator Julie Denton of Jefferson County.

She is the chair of the Senate Health and Welfare Committee and is on the Medicaid Oversight and Advisory Committee.

She says the only way to avoid those cuts is an infusion of cash. One potential source is from smokers, through an increase in the state’s cigarette tax. But even then, Denton says, there would be a long line of agencies jockeying for the money.

“I’ve been around long enough to see that whenever there’s some influx of new money, whether is tobacco settlement dollars, or it’s cigarette tax money, everybody wants a piece of the pie,” says Denton.

If there’s no money from a cigarette tax, Medicaid administrators are hoping the federal government will commit to a larger contribution than its current 70% share.

Denton says if those two options fail, the picture gets bleak.

“You’ve got to look at potentially cutting programs,” she says, “it may be some real pain and some real tough things that are going to have to happen if we can’t get an infusion of cash and we can’t figure out a smarter way to make these dollars stretch.”

Meanwhile, more Kentuckians are facing unemployment… more are signing up for Medicaid benefits… and that $232-million shortfall continues to grow.

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