The Richmond Register

State News

August 25, 2009

Stimulus money helps state balance Medicaid

FRANKFORT — Kentucky’s Medicaid system would be more than $230 million in the ole without the influx of federal stimulus money.

At the same time, the state is short of money because of a deep recession, the demands on Medicaid have grown as a result of the depression, according to Medicaid Commissioner Betsy Johnson, adding 3,000 eligible participants each month since June of 2008.

But $303.4 million from the American Recovery and Reinvestment Act (ARRA) — the federal stimulus — in fiscal year 2009 and a projected $486.0 million in 2010 has balanced the books and even allowed the state to transfer $63 million of general fund dollars in 2009 and $383 million in 2010 from Medicaid to soften budget cuts to other areas of state government.

That is because the extra federal money allows the state to reduce its portion of the bill from 30 percent to 20 percent on each dollar. Kentucky went from a 70-30 federal-state match to 80-20 because its unemployment rate rose above 8.9 percent. From January 2008 until July 2009, in fact, the unemployment rate rose from 5.9 percent to nearly 11 percent.

That poses a potential problem, however, according to Rep. Jimmie Lee, D-Elizabethtown, co-chair of the General Assembly’s Medicaid Oversight and Advisory Committee.

If Kentucky’s unemployment rate were to fall below 8.9 percent, the match would return to 70-30 — and the state has already allocated the general fund dollars it would need to make up the extra 10 percent.

“If the unemployment falls — and I hope it does — and the (federal) match is reduced, we don’t have that general fund amount to provide the state match,” Lee said Monday.

Johnson agreed: “We want the unemployment rate to go down, but if it does, the Medicaid match will drop,” Johnson said. Still, she said, there is a direct correlation between the unemployment rate and the number applying for Medicaid assistance. As more people return to work, the number of eligible participants should also decline.

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