Georgia Expects $608 Million Medicaid Deficit

By Craig Schneider
The Atlanta Journal-Constitution
January 22, 2010

Georgia is projecting a $608 million deficit in Medicaid, and Gov. Sonny Perdue is proposing a tax on hospitals and managed care insurers to help bridge the gap, officials said Thursday.

The Medicaid gap is largely due to the reduction of $506 million in money from sources that include the federal stimulus program and the national settlement with tobacco companies.

In addition, the recession has spurred a projected 7.7 percent increase in enrollment in the state's Medicaid health program for the needy from July 2009 to June of this year. That program is expected to grow an additional 2 percent in the following budget year, said officials of the state Department of Community Health.

DCH Commissioner Rhonda Medows discussed the Medicaid problem Thursday during a series of state budget hearings on health and human services.

The hearings at the state Capitol also featured discussion on the proposed budget for the state mental health agency, which is slated to receive an additional $70 million over the next 18 months.

The $608 million Medicaid deficit is projected for fiscal year 2011, which begins in July. Medows said her agency does not have the means to make up for the Medicaid deficit without generating new revenue.

To help bridge the gap, Perdue's proposed budget calls for a 1.6 percent tax on net patient revenue of hospitals and premium revenue on managed care insurers. The two fees would generate $345 million annually, officials said.

Perdue had floated a similar fee proposal a year ago, and it was not well-received.

Medows said that if the new taxes are not approved, her agency would have to decrease Medicaid reimbursement payments to hospitals, doctors and other health providers by 16.5 percent.

Rep. Mickey Channell (R-Greensboro), chairman of the House Appropriations health subcommittee, said he opposed the hospital tax because it would benefit some hospitals and not others.

He noted that federal restrictions prevent the state from tinkering with the eligibility requirements on Medicaid, which is funded by both the state and federal governments. He said he was open to discussing the fees on the managed care companies.

Medows said Perdue's proposed budget also planned for increases in the premiums state employees pay into their health benefit program. The health plan -- which covers 689,000 state employees, their dependents and retirees -- would increase 10 percent across all options, officials said.

For the employee on the state HMO program, the most popular plan, the cost would increase about $10 a month for a single person and about $25 a month for a family.

Officials from the state Department of Behavioral Health and Developmental Disabilities said their agency may be the only one to receive more money in the state budget.

The agency has agreed to a settlement with the U.S. Department of Justice to improve treatment and conditions at the state's mental hospitals. Perdue has proposed adding $20 million to the agency's budget from January through June. After that, Perdue has proposed adding an additional $50 million to the agency's $1 billion annual budget.

The additional money would be used to hire more staff for those mental hospitals that are understaffed, increase training, transfer paper records into electronic form, and increase community-based services, officials said.

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© 2010 The Atlanta Journal-Constitution