Beebe proposes new spending, cuts to address Medicaid shortfall

LITTLE ROCK — Gov. Mike Beebe is proposing $210 million in new spending and $148 million in cuts to address a looming shortfall in the state Medicaid budget, state legislators heard Tuesday.

Lawmakers meeting at the Capitol for budget hearings in advance of the regular session that begins in January were scheduled to take up the Medicaid budget Tuesday afternoon, but a daylong meeting on the state Department of Human Services’ budget was barely under way this morning when legislators began asking questions about Beebe’s proposal for dealing with the Medicaid shortfall.

“This is the elephant in the room we’ve all been waiting for,” said Rep. John Burris, R-Harrison.

Legislative analyst Keith Gober said the DHS request for a $375 million increase next year over its current budget includes funding to cover a projected $358 million Medicaid shortfall.

Gober said Beebe proposes to increase general-revenue spending on Medicaid by $90 million, depleting the state Medicaid Trust Fund for a projected $50 million and spending $70 million in one-time surplus funds to cover $210 million of the shortfall for the 2013-14 fiscal year.

Beebe is proposing cuts to address the remaining $148 million, Gober said. Details on the proposed cuts were expected to be presented to lawmakers Tuesday afternoon.

The governor’s total budget recommendation for DHS is $6.5 billion, including state and federal spending.

The $358 million increase DHS is requesting for Medicaid does not take into account the proposed expansion of the program to include people earning up to 138 percent of the federal poverty level, a provision of the federal Affordable Care Act that the U.S. Supreme Court has said must be optional for states.

Beebe supports the expansion, the cost of which would be paid entirely by the federal government for the first three years. After that, the state would pay a gradually increasing share of the cost, maxing out at 10 percent.

Republican lawmakers have expressed resistance to the proposed expansion and, barring a reversal of the election results in a northeastern Arkansas House district where the Democratic candidate has requested a recount, Republicans will hold majorities in both the House and Senate in the coming session.