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Barbour revises plan to cover $90M gap in Medicaid budget

Gov. Haley Barbour will ask lawmakers to set aside $45 million to cover half of a $90 million shortfall in state funding for Medicaid.

His announcement came a day after Barbour held a news conference to say the state had ended its 2006 budget year on June 30 with $70 million in the bank.

Lawmakers, not the governor, decide how state money is spent.

Barbour said Medicaid has a $90 million budget gap because the federal government is stopping Mississippi and other states from using a complicated funding formula that had allowed the states to receive more federal money.

“Let me emphasize that the federal government is mandating this change,” Barbour wrote Thursday in a memo sent to lawmakers and others interested in the Medicaid program.

“My preference was and is to keep our existing system,” the governor wrote. “I’ve asked for exemptions and delays, but we have finally been forced to discard the old system.”

Medicaid is a federal-state program that provides health coverage for the needy, aged, blind and disabled and for low-income families with children. About 747,000 Mississippians are on Medicaid.

For every $1 Mississippi puts into the program, the federal government puts in about $3. That means a $90 million shortfall in state funding would cause a loss of roughly another $270 million to Medicaid.

The $90 million previously had been provided through an assessment on public hospitals.

Sam Cameron, president and CEO of the Mississippi Hospital Association, said in a statement that his association’s position has not changed. Cameron has questioned whether the governor has the authority to raise the tax without lawmakers approval.

Attorney General Jim Hood has said he is reviewing whether the governor can raise the assessment.

Barbour’s latest plan to cover the funding gap is a change from a plan announced last month. Medicaid Executive Director Robert Robinson, a Barbour appointee, said in a June 8 letter to hospital administrators that Medicaid would charge an assessment of about 1.5 percent on the gross revenues of all hospitals. Officials said that would have brought in $90 million.

Critics called the June 8 proposal an unauthorized tax increase. Some administrators of private hospitals said the assessment would force them to cut staff or services.

Under the new plan, Barbour said hospitals collectively would pay about $45 million, and the other $45 million could come from the state.

“Over the past several weeks, I have become increasingly concerned about the potential negative financial impact of the June 8 proposal on private hospitals,” Barbour wrote in the memo Thursday.

Barbour said he hopes to have the new formula in place by Sept. 1. Lawmakers’ next regular session starts in January, but it’s common for them to approve deficit funding for state programs months after the money is needed.

One leading budget writer, Rep. Cecil Brown, said any cash that carries over from one budget year to the next is “one-time money,” and should not be used for recurring expenses.

“This Medicaid shortfall of $90 million was news to me,” Brown, D-Jackson, said Thursday, adding that he learned of the problem from recent news reports.