State faces $152 million Medicaid shortfall

Deficit blamed on low enrollment projections, spiraling health costs

October 03, 2001|By Michael Dresser | Michael Dresser,SUN STAFF

Maryland's Medicaid program is running a deficit projected at $152 million this fiscal year, canceling out the budget windfall the state received in unexpected revenues by the end of last year.

The Medicaid shortfall, caused by faulty enrollment projections and soaring inflation of medical costs, is forcing state officials to scramble to find ways to hold down the cost of health care for low-income Marylanders. But officials say they can do so without cutting vital services.

The deficit, detailed in a report to the General Assembly, is in addition to a budget deficiency of $35 million in the state's mental health program, the report says.

Sen. Barbara A. Hoffman, chairman of the Budget and Taxation Committee, said the latest Medicaid deficit projection is about $50 million higher than legislators expected.

The shortfall will take at least a chunk of the budgetary cushion the state has amassed to guard against the shock of an economic slowdown. In August, the state got good news when it found that revenue for the fiscal year that ended June 30 was $153 million higher than anticipated.

Hoffman, a Baltimore Democrat, said the deficit was "one of the normal ups and downs of dealing with medical assistance" and indicated that the shortfall might force cuts in other areas of the budget.

"It may mean that some other things that are discretionary won't happen when we want them to happen," she said.

But House Minority Whip Robert L. Flanagan called the numbers a "disgrace."

"The dirty little secret in Annapolis is that Governor [Parris N.] Glendening, Lieutenant Governor [Kathleen Kennedy] Townsend and other Democratic leaders have been bolstering their resumes with expensive new programs at the expense of adequately funding care for the elderly in nursing homes and other core government services," the Howard County Republican said.

Debbie Chang, a deputy health secretary, said the state will not cut medical services and that officials are considering accelerating the collection of overpayments to nursing homes.

The shortfall comes at a time when the managed care companies that provide services under Medicaid are pressing for increased compensation and threatening to walk away from the program without it.

David Roumans, a legislative analyst who helped prepare the report, said one reason for the deficit is that the state assumed the Medicaid caseload would decline to a maximum of 428,000. But by August, he said, enrollment had increased to 458,000.

Chang said the projections were off largely because officials underestimated how many people the state would reach through its effort to publicize the Maryland Children's Health Insurance Program.

House Speaker Casper R. Taylor Jr. said budgetary problems in Medicaid, mental health care, managed care companies and university medical centers are all coming up at the same time.

"You put them all together and it's beginning to look like the health care area is going to absorb a lot of time and effort in the legislature this winter," Taylor said.

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