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The GF Budget Impact of Medicaid Spending In Virginia. Virginia Association of Counties Prepared by James J. Regimbal, Jr. Fiscal Analytics, Ltd. November 2009. Medicaid Introduction.
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The GF Budget Impact ofMedicaid Spending In Virginia • Virginia Association of Counties • Prepared by • James J. Regimbal, Jr. • Fiscal Analytics, Ltd. • November 2009
Medicaid Introduction Medicaid is Virginia’s primary publicly-financed health care program for the elderly, blind and disabled, low-income children and pregnant women, and very low-income adult caretakers. About 929,000 people were covered by the program in Virginia at some point in FY 2009. About two-thirds of Virginia’s Medicaid spending is on blind and disabled, and long-term care for the elderly.
Medicaid Is a Shared Obligation Between the Federal and State Government • The Federal government’s share of Medicaid expenditures is called the Federal medical assistance percentage (FMAP) • The FMAP varies by state based on a relationship of a state’s per capita income to national per capita income • Minimum FMAP is 50%. Maximum FMAP is 83% (Highest FMAP for FY 2010 is MS at 75.67%) • Federal ARRA temporarily increased state FMAPs depending on a state’s unemployment rate. • ARRA has temporarily increased Virginia’s FMAP from 50% to 61.58% thru CY 2010. This is worth additional federal funding of $720 mil. in FY 10 and $360 mil. in FY 11.
States May Require Local Governmentsto Share a Portion of Medicaid Fiscal Obligations • State funds (as distinguished from local funds) must be used to pay at least 40% of the non-Federal share of total expenditures under the State plan. • If there is local financial participation, lack of funds from local sources will not result in lowering the amount, duration, scope, or quality of services or level of administration under the plan in any part of the State. • Up to 20 states have some local participation in Medicaid financing. New York and North Carolina are the only two states that require localities to pay a significant portion of Medicaid program costs.* - In 2004, NC localities financed about 5.5% of Medicaid costs - In 2004, NY localities financed about 16% of of Medicaid costs • Virginia does not currently require local match participation. *Sources: Kaiser Family Foundation, Medicaid-Financing-Issues-Intergovernmental-Transfers-and-Fiscal-Integrity, Feb. 2005 NY Health Points. February 2006 http://www.empirecenter.org/Documents/PDF/HP-01.pdf
* DMAS forecasted - does not include Medicaid expenditures for MH&MR facilities and CSA = $361mil. in FY 2008
Virginia Spends Significantly Less on Medicaid Than Other States Source: Kaiser Family Foundation, State Health Facts.Org
Are Significant Virginia Medicaid Savings Possible? • Reduce Eligibility • - Already stringent • Reduce Provider and Hospital Payments • - Payments already at 70% of cost • Eliminate/Modify Limited Optional Services • - Prescription Drugs ($247 mil., plus portion of $1.2 bil.MCO capitation) • - MR Waivers ($521 mil., minus acute care) • - Outpatient Mental Health ($269 mil.)
Medicaid Spending on the Elderly Will Begin to Grow Rapidly Again With Aging Baby Boomers CY 10 CY 20 CY 30 U.S. Census Bureau Population Projections
2010-12 Budget Outlook • 2010-12 Fiscal Analytics GF budget outlook assumes no change in current services appropriations from FY 2010 with three exceptions: • 1) A seven percent utilization growth rate in Medicaid funding. • 2) Normal re-benchmarking increases in public education funding (July preliminary: $60 mil. FY 2011; $79 mil. in FY 2012) • 3) Planned GF debt service cost increases • General funds necessary to offset loss of federal stimulus funding.
Significant Additional General Funds Will be Necessary to Maintain Current Services When Federal Stimulus Ends *Federal ARRA stimulus funds used by Virginia to offset general fund cuts ** DMAS forecast presented to Senate Finance Committee 10/22/09