Medicaid worries loom as W.Va. budget work begins

CHARLESTON (AP) — Medicaid is expected to be a recurring topic as the West Virginia Legislature completes a new state budget this week.

Meeting in extended session, a House-Senate committee will review Gov. Earl Ray Tomblin’s bid to keep pace with the state-federal health care program by banking funding for future use.

The governor’s $11.6 billion spending plan for the budget year that begins July 1 includes $132 million in new state funds for Medicaid, said Budget Director Mike McKown. But around $32 million of that is meant to serve as surplus for the following budget year.

Tomblin updated his proposed budget twice since first delivering it to the Legislature in January, and added money for Medicaid each time. During the just-completed regular session, the Democrat also had lawmakers add at least $27 million to the current budget. Officials expect those funds to roll over unspent into the upcoming budget.

“Medicaid’s funded all over the place,” McKown said of the governor’s spending proposals.

The goal is to draw down federal funds under the current matching rate of nearly $3 for each $1 budgeted by the state. As personal incomes improve in West Virginia, its matching rate declines. The drop in the matching rate, which is projected to continue, is one of several factors behind Medicaid’s growing share of the state budget, McKown said.

Another is health care costs, which generally continue to rise faster than inflation. The state has also seen the end of extra funds for Medicaid brought by the federal stimulus program, McKown said. West Virginia deposited these additional dollars in a special reserve during the stimulus years, instead of expanding Medicaid’s rolls or boosting benefits. This reserve has helped the state cope with the increase in Medicaid spending, but is nearly depleted, McKown said.

“We will spend more this fiscal year in state funds than we appropriated,” he said. “We are starting to spend those balances down.”

The federal health care overhaul has yet to play a role in Medicaid’s growth, McKown said. The federal law will require states to open their programs starting in 2014 to people who earn less than 133 percent of the poverty level. That equates to around $14,800 annually for a single-person household. West Virginia officials estimate that 140,000 additional residents will become eligible for the state’s program in 2014. Federal funding will cover this expansion entirely _ but only for the first three years.

West Virginia now has among the strictest qualifying thresholds for Medicaid, leaving it largely for the disabled and the children of the working poor. Around 330,000 West Virginians received their health care through Medicaid in 2010, according to the latest U.S. Census Bureau estimate. Only 11 states had a higher percentage of its residents relying on this government program for coverage. Nearly half of West Virginia’s Medicaid enrollees are under 18.

McKown said the various spending proposals have already reduced the projected shortfall of state funds for Medicaid in the 2013-2014 budget year, from $200 million to around $170 million.

House and Senate leaders have differing views of Tomblin’s Medicaid funding game plan.

“I’d prefer to put as much money as we can aside as a cushion,” Senate Finance Chairman Roman Prezioso said Saturday.

The Marion County Democrat said he’s also eyeing the ongoing general tax revenue surplus, which approached $63 million at the end of February. If revenues continue to outpace estimates by the June 30 end of the budget year, half of the excess amount will go into the state’s main emergency reserve.

“The other half should be dedicated to Medicaid,” Prezioso said.

The Senate also supported Tomblin’s legislation — one of only two agenda items that failed this session — that proposed to dedicate investment earnings from the state’s secondary reserve toward Medicaid. Officials estimated that this would have provided around $8.5 million annually for the program. The bill died in the House, partly over concerns with its other provisions increasing the main reserve and creating a new fund for future surpluses meant for infrastructure needs.

House Finance Chairman Harry Keith White said that the Medicaid funding problem is real, but that the state has other pressing needs as well. He cited shortfalls in roadway spending, requests from public libraries and the debate over funding for the West Virginia Regional Technology Park in South Charleston as but a few of the topics awaiting the joint budget conference committee this week.

“We need to figure out how much we want to do in this 2013 budget, versus pushing everything out to the 2014 budget,” said White, D-Mingo. “I understand we have a problem with (Medicaid) going forward, but sometimes I’m a little hesitant putting all that extra money in the current budget for future liabilities.”

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