State Budget Should Plan for People Returning to Medicaid

Decision makers in Annapolis appear willing to gamble on passing a budget that likely won’t meet the state’s needs. It could leave the state scrambling to find more funding next year and put critical programs at risk. Last week, the Senate Budget and Taxation Committee voted to further reduce planned spending on the state’s Medicaid program as the committee made cuts to the governor’s proposed budget, which already shortchanged the program.

Medicaid helps ensure that low-income individuals and families can receive the health care they need to be productive members of their communities. The governor’s budget estimates that just over 1.2 million Marylanders will be eligible for Medicaid in fiscal year 2017, which starts July 1st. However, many heath care providers and advocates believe that is a severe underestimate of how many Marylanders are actually eligible to enroll in the program.

As the state reviewed Medicaid eligibility for all participants last year, 122,000 Marylanders fell off the Medicaid rolls—a 9.2 percent drop. Some people became ineligible through changes in income but a majority of the drop was because of administrative problems people encountered when they tried to re-enroll in the program. Health care providers and health advocates expect many people to eventually re-enroll in Medicaid throughout the year.

Governor Hogan’s proposed budget for the next fiscal year allocates $3.9 billion in state spending for Medicaid. This is a 7 percent increase overall, but a large portion of this is for provider rate adjustments so the budget only devotes enough funding to support a 4.1 percent increase in enrollment. To make matter worse, the Senate committee last week cut the Medicaid budget by another $58 million.

If advocates are right and Medicaid enrollment growth is closer to 9 percent, this will cause problems in the budget down the line. The state is obligated to cover all Medicaid-eligible Marylanders, so when the budget does not accurately reflect the number of people enrolling, funds have to be shifted from reserves or other parts of the budget to cover the unexpected expenses, causing a ripple effect through the state’s finances. If the Medicaid cut passes, Governor Hogan and the legislature should prepare for the likelihood that the state will need to divert additional funds later in the year.