Summary of Proposed Amendments to Healthcare Budgets

The Georgia Budget and Policy Institute released a document highlighting the Governor’s Amended FY 2010 & FY 2011 Healthcare Budget Proposals. The summary of that document is below, followed by a link to the full report.

“The enacted fiscal year (FY) 2010 budget spared the Department of Community Health (DCH) from large-scale program cuts because enhanced federal Medicaid funding from the American Recovery and Reinvestment Act of 2009 as well as additional Tobacco Settlement funds were used to replace DCH state General Fund spending.

The extra Tobacco Settlement funds have been depleted, however, and are unavailable in FY 2011. In addition, the enhanced Medicaid funding in the Recovery Act is slated to expire December 31, 2010.

By the end of this fiscal year (June 30, 2010), DCH is projecting a 7.7 percent increase in enrollment in the portion of Georgia’s Medicaid program that serves low-income children and pregnant women, compared to June 2009. This population grew by approximately 12 percent from June 2008 to June 2009; however, the governor’s budget assumes that enrollment growth will slow to 2 percent from June 2010 through June 2011.

As a result of the looming expiration of the Recovery Act funds, the loss of one-time Tobacco Settlement funds, projected increases in enrollment, and rising healthcare costs, DCH reports that it is facing a funding hole of $608 million in FY 2011.

In order to fill this hole, the governor is proposing new 1.6 percent healthcare provider fees on hospitals and managed care organizations in Georgia. In total, the proposed fees raise $247.1 million from hospitals and $97.1 million from managed care providers. The governor’s budget uses these revenues to: replace the lost Tobacco Settlement funds; fund relatively modest enrollment and expenditure growth; and increase reimbursement rates paid to hospitals and the Medicaid Care Management Organizations (CMOs) to offset all or a portion of their new fees.

In addition to the new provider fees, the governor’s budget assumes that Congress will extend the enhanced Medicaid funding included in the Recovery Act for an additional six months. Because many states continue to face sizable budget deficits, many other states likely will be urging Congress to extend
the enhanced Medicaid funding. Such an extension has not yet been passed; however, Georgia’s FY 2011 budget as proposed by the governor would be short $378.5 million if such an extension is not enacted.

The Department of Behavioral Health and Developmental Disabilities also benefits from the enhanced federal Medicaid funding in the Recovery Act. As in DCH, the FY 2011 budget reflects the full year continuation of these funds, although they are currently slated to expire mid-year in FY 2011.

While many state agencies have seen net budget reductions in recent years, the governor proposes increasing funding in both AFY 2010 and FY 2011 for hospital operations and to address quality-of-care issues. The budget also adds funding in FY 2011 for new waiver slots and to annualize developmental disability waiver slots added in the original FY 2010 budget.

The following discussion provides an overview of the governor’s budget proposals for the two departments and various components of each.”

Click here to download the full report.