Medicaid needs $75 million to plug big holes in its budget

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Just four days into the 2017 session, the Division of Medicaid has asked the Legislature for a $75 million deficit appropriation.

Medicaid is hoping to plug the holes left by two massive cuts to its budget this fiscal year.

During the last session, the Legislature appropriated $950 million to Medicaid, which is $63 million less than the agency had requested. Then in September, agencies were hit with a series of mid-year cuts to address a $57 million “accounting error” that overestimated expected revenue to the state. Medicaid’s cut was $15.4 million.

The department is at a loss for how to absorb these cuts, according to Erin Barham, the agency’s deputy administrator for communications.

Erin Barham, Mississippi Division of Medicaid

“Well, right now we don’t know what it means,” Barham said. “But (the Legislature is) in session so hopefully they’ll find the deficit appropriation.”

Last summer and fall, lawmakers in budget working groups examined how each state agency spent its money. During one session, Dr. David Dzielak, Medicaid’s executive director, explained that his agency often has a harder time cutting costs than others because it doesn’t control who receives Medicaid benefits.

Because Medicaid is essentially a government-run insurance company, reimbursing providers is the agency’s biggest expense, making up approximately 97 percent of the department’s expenditures. As a result, external factors, such as the unemployment rate, often make a bigger impact on how much his agency is required to spend.

Rogelio V. Solis, AP

State Medicaid Executive Director David Dzielak 

“Our expenditures are tracking with medical inflation. If everyone got super healthy we’d save a little money, but really the bigger issue is if the economy of the state does a little bit better,” Dzielak said in October. “One in four (Mississippians) receive benefits – that’s higher than other states.”

Sen. Brice Wiggins, R-Pascagoula, who chairs the Medicaid committee, will hold a joint meeting next week on Medicaid to address this and other issues.