The Richmond Register

August 25, 2009

Stimulus money helps state balance Medicaid

Ronnie Ellis

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.

But Rep. Tom Burch, D-Louisville, said there is a lag between rising employment and a reduction in the Medicaid rolls — and he wanted that some employers may reduce or eliminate private insurance coverage as they add employees back into their workforce.

Sen. Walter “Doc” Blevins, D-West Liberty, a practicing dentist, asked how many Medicaid providers there are in Kentucky and what percentage of physicians, dentists and other providers are Medicaid certified. Johnson said there are about 40,000 certified providers of all types and there are five counties which have no Medicaid certified providers and several counties with only one certified provider, but she was not able to provide a percentage of providers who are Medicaid certified.

Blevins commended Johnson for the low administrative costs — 2 percent of a $5.6 billion program.

“We hear this all the time — those government programs don’t work,” Blevins said. “But 2 percent administration is just amazing. You should be commended.”

Johnson said the state has added 22,000 children to the federal-state children’s insurance program — K-CHIP — since Gov. Steve Beshear implemented an outreach program to identify and enroll children who were eligible for the program but not enrolled. About 55,000 Kentucky children are in the program.

Those children are eligible if their families earn up to 200 percent of the federal poverty guideline. Others are served directly by Medicaid. In all, she said, about 377,095 children in Kentucky receive some sort of state assistance for medical care and treatment.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. The Richmond Register is a CNHI newspaper.