$300 million shortfall in Medicaid funding could mean tough decisions, Cabinet for Health and Family Services Secretary says

A shortfall of $300 million is projected over the next two years for the funding of Medicaid. Meanwhile, the state’s waiver which crafted a plan for what Medicaid expansion would look like in Kentucky is hung up in the courts. So, what happens to the expansion population in the scenario that a path forward is not found soon? Cabinet for Health and Family Services (CHFS) Secretary Adam Meier says he expects some tough decisions will have to be made to cut benefits or find new revenue.

In an interview with The Bottom Line, Meier said the $300 million gap expected in the Medicaid budget, which comes as a result of some federal and state policy changes as well as the state budget passed in 2018 and other factors, presents significant issues for the state.

“The here and now is that we have a pretty significant shortfall and not a whole lot of options on how to deal with it,” Meier said.

In terms of ways to deal with the issue, Meier said the options are either cuts to benefits or finding more money to deal with the shortfall through new revenues.

Benefit cuts would take into consideration what the state is required to cover and the populations its required to serve as well as benefits that are optional, which would include many available to the expanded Medicaid population (those who make up to $138% of the poverty rate—which covers more than 400,000 in the state). Some of the reductions could include optional dental and vision benefits for those on expanded Medicaid.

“Looking at the eligible populations and looking at the eligible benefits and each one of those has a price tag. And so, wherever the shortfall is, that may be where we have to look absent an influx of revenue somewhere else to make up for that shortfall,” Meier said.

The new CHFS Secretary said the funding issues are something that would have to be dealt with in 2019 by the legislature either through revenue measures during the 2019 session or a special session. And while the immediate funding needs are significant, Meier also said the state needs to look at the long-term issues of the programs as well as even more money will be required of the state in coming years to sustain Medicaid expansion.

Meier said the Medicaid waiver was a way they planned to help stabilize the system and teach individuals how to better utilize the healthcare system while also encouraging them to potentially re-enter the workforce. (Learn more about the Medicaid waiver here.)

The state’s Medicaid expansion currently hangs in the balance with the Bevin administration’s waiver to customize the way Kentucky’s expanded Medicaid population receives benefits making its way through the courts. Meier said they are optimistic about getting the waiver back in place but because it was supposed to be put in place July 1, “every day that passes, we are losing an opportunity to be saving dollars that could help sustain Medicaid expansion.”

Watch the full interview with CHFS Secretary Meier below: