Balancing Georgias Medicaid & CHIP Budgets Tim Sweeney Sr. Healthcare Analyst Georgia Budget & Policy Institute January 29, 2010

Setting the Stage Political Climate Very Conservative, yet paternalistic Budget & Revenue Picture Low taxes & spending levels pre-recession Existing Medicaid Program Low parental eligibility (50% FPL) Low reimbursement rates Administrative barriers (income/identity/cit doc)

GA Facing Dramatic Revenue Loss Original FY 2009 Estimate = $20.1 B Actual FY 2009 Revenue = $16.8 B Revised FY 2010 Forecast = $15.6 B Original FY 2009 Medicaid/CHIP = $2.1 B Actual FY 2009 Medicaid/CHIP = $1.5 B Revised FY 2010 Medicaid/CHIP = $1.4 B

Balancing FY 2010 Pre-ARRA Governor proposed hospital & HMO taxes or Medicaid provider rate cuts Legislature recessed while congress debated ARRA Recovery Act funding was crucial for Medicaid Estimated $726 M (FY 2010) in savings due to enhanced FMAP Enhanced federal share 75% Expiration created hole in FY 2011 & FY 2012

FY 2011 Recovery Act & one-time funds expiring Agency forecasts $600+ million hole Gov proposes provider taxes Funds very limited enrollment growth Govs budget assumes 6-month extension of ARRA-enhanced FMAP $378.5 M hole remains without extension

Governor Proposes Provider Taxes 1.6% provider taxes $247.1 M from hospitals $97.1 M from managed care orgs Funds directed for rate increases, enrollment growth, replacing 1-time funds Generates or protects $1 billion in federal funds Lots of opposition Gov & agency threaten 16.5% rate cuts without new fees

GA in Need of Additional Revenues Gov predicting $2.6 B shortfall in 2012 Revenue options exist: Cigarette Tax: $1/ pack raises $400 million Temp. 1% surtax on income > $400k raises $225 million Reduce caps and values of existing tax credits and exemptions Close corporate tax loopholes

Contact Info Tim Sweeney 100 Edgewood Ave, Suite 950 Atlanta, GA