Budgetary Analysis
Heather Horning
HCS/550
August 18, 2014
Elaine Bobo

Budgetary Analysis The Medicaid program is one of the largest sources of health insurance in this country in addition to employer-based health insurance and Medicare. Medicaid delivers crucial medical related services to the most at risk populations in society. The importance of Medicaid's part in providing health insurance cannot be exaggerated; “the Medicaid program covers millions of low-income women, children, elderly people and individuals with disabilities” (U.S Department of Health and Human Services, 2000). Funding for Medicaid is limited through various federal policies, leaving much of the program’s budget burdened on the individual states to make necessary spending cuts in order to provide the funds needed for the demand of the program. Budgetary decisions need to be thoroughly reviewed before any immediate action is taken as these decisions can create a domino effect on other programs and their participants as sections of this paper will describe.
Medicaid Overview
Medicaid is a cooperative federal and state program with a common goal to provide a vital service for the general public. “Medicaid is the largest source of federal revenue for states. Medicaid funds support health care providers, jobs and state economies overall” (Kaiser Family Foundation, 2013). Every state institutes its own eligibility criteria, benefits platform, payment rates and program organization under the broad federal recommendations. Medicaid provides three types of vital health protection, including health insurance for low-income families with children and people with disabilities; long-term care for older Americans and individuals with disabilities; and supplemental coverage for low-income Medicare beneficiaries for services not covered by those entitled to Medicare.
Budgetary Policies
Policy creation is the design of an effective and satisfactory plan with steps outlined for addressing a specific policy agenda with the overall goal resulting in public policies in the form of new public laws or improvement modifications to current laws. Budgetary policies maintain the same goals with the planning, reviewing, and implantation process. However, legislation related the government’s budget is reviewed with special consideration due the critical impact of the budget in relation to needs of the public. “The Congressional Budget and Impoundment Control Act of 1974 (P.L. 93-344) and its subsequent amendments provide Congress with the process through which it establishes target levels for revenues, expenditures, and the overall deficit for the coming fiscal year” (Longest, 2010, p. 94). The Control Act of 1974 acts as a safeguard to keep budgetary policies in place with standard regulations.
Legislative Assignments
The House of Representatives is the primary lead in the budget process, however, both the House and Senate play vital roles in the review and implantation process of budgetary legislative decision making. The role of the president is much more official in budget legislation, “the president is required by statute to submit a budget to Congress each year and by doing so, the president establishes the starting point and the framework for the annual process of legislation development for the federal budget” (Longest, 2010, p. 95). The federal budget then helps to dictate funding and budgetary decisions at state level. States create specific budget legislation with variations depending on the state’s individual needs; however, according to Longest, they utilize the same common steps during the legislation process including:
“1. Budget preparation. The budget is developed and submitted to the General Assembly.
2. Legislative review and enactment. The budget is reviewed by Appropriations Committees of the House and the Senate. The General Assembly enacts its decisions about the budget in the form of the General Appropriation Bill and several individual appropriation bills.
3. Budget execution. The Governor assumes responsibility for implementing the budget, although the various state agencies share this responsibility and the Office of the Budget is heavily involved.
4. Audit. There is an ongoing audit of financial performance and monitoring and evaluating performance of the state’s various programs” (2010, p.97).
Budgetary Changes
As federal funding changes, states must find alternate ways to continue to fund Medicaid services for individuals who continue to be eligible and enrolled in the program. There is no backup fund for Medicaid as there are for other entitlement programs at the federal level. The federal funding is obtained from general yearly revenues, “the federal government contributes between 50 percent and 83 percent of the payments for services provided under each state Medicaid program” (U.S Department of Health and Human Services, 2000). There is a federal matching assistance percentage (FMAP) that is determined from state to state based on the average per capita income from each state. Generally, the states with a lower average of per capita income compared to the average of other states will receive the higher end of the federally contributed FMAP.
The cost of the Medicaid Entitlement Program continues to grow a soaring rate leaving states scrambling as state legislators try to find enough revenue to fill the growing gap to continue to be able to provide vital services offered in the Medicaid Program. According to the Washington Post writer Sarah Kliff, “the biggest driver of Medicaid spending is not the cost of medical care. It’s caseload, which has spiked in the last two recessions. Persistent, long-term unemployment meant "the increases in Medicaid spending were greater than in previous recessions" (2012). As more people continue to become eligible and are enrolled in Medicaid, funding from other state programs will need to be reviewed and reduced or even cut to help bridge the higher costs and revenues needed to support the trend of the increased demand of the program. Without the revenue to support the Medicaid budget, its’ program members would lose access to health care services, providers would lose patients due to their lack of coverage, and many health care facilities would be faced with huge losses in revenue that Medicaid covered patients currently provide. This would significantly the state’s economy as many jobs within the health care industry would be affected if the patients and providers were reduced or eliminated.
Prioritization
Presently there are more than 59 million people enrolled the Medicaid system for health care. Enrollment is anticipated to grow to add approximately 16 million more people by 2019. The federal budget deficit is growing each year resulting in less federally funded support to the states participating in the Medicaid Program. “Between 2011 and 2020 overall Medicaid expenditures are projected to grow at 8.7 percent per year by the CMS actuaries and 8.1 percent per year by CBO” (Holahan and McMorrow, 2012). With State governments facing a budget crisis many are looking for ways to cut the Medicaid program; however, this would be a disservice to many of the stakeholders including benefit recipients and providers. Alternately, there are just over 20 states that stand behind the idea of Medicaid expansion under the Affordable Care Act with the enhanced matched funding percentages.
Without restructuring of the current Medicaid Program the growing revenue deficit in the individual state budgets will need to be reined in. States will have to prioritize funding in order to support Medicaid by making cuts in funding for other programs or cancelling programs all together. Legislators must prioritize how to make up revenue that is needed for the Medicaid budget while still doing what’s best for their citizens. Trends show that as Medicaid spending increases other program, primarily those related to education; see a reduction in their budgets. Many states pull from early education programs or cut funding entirely in order to extract money from those programs into Medicaid in order to keep the standard of care for those receiving the program benefits at the expected standard.
Political Climate
Pennsylvania is a heavily supportive Democratic State, “currently, Democrats outnumber Republicans by more than 1.1 million voters” (Pennsylvania Democrats, 2014). However all parties agree that the rising cost concerns associated with Medicaid need to be addressed immediately, “in the past decade, Medicaid spending increased 83 percent compared to a 45.4 percent increase in Pennsylvanians' personal income” (Stelle, 2012). The program has also increased faster than the state’s tax revenue and will seemingly continue to grow quicker than the economy. States are not required to participate in the Medicaid expansion under the Affordable Care Act and while Governor Corbett has not spoken about an official stance on the plan. Corbett has expressed concern over the expansion in this state; currently one in six Pennsylvanians are enrolled in Medicaid and with this expansion it would go to one in four in this state. “In contrast, 45 members of the Pennsylvania House of Representatives articulated their opposition to expanding Medicaid in a July letter to Governor Corbett. House Majority Whip Stan Saylor has circulated a co-sponsorship memo for legislation that would require Pennsylvania to opt out of the Medicaid expansion under the ACA” (Stelle, 2012). Most of the associated costs under the expansion will be covered federally; PA would still be responsible for up to five billion in tax payer costs.
While the state is in limbo regarding the expansion of Medicaid, “an estimated 400,000 Pennsylvanians living below the poverty line have fallen into a gap in which they qualify for neither Medicaid coverage nor financial assistance on the health insurance exchange. They are currently exempt from the individual insurance mandate under the ACA” (Carpenter, 2013). Governor Corbett has proposed a plan to use Medicaid expansion funding to subsidize private health insurance for those living below 133 percent of the poverty level under the Healthy PA Plan to also include work-search requirements for participants. This plan’s members would be required to pay a monthly premium based on their income with options to lower the rates by participation in purposed wellness programs.
Conclusion
There is no simple solution to fix the Medicaid Entitlement Program. While the plan was created with great intentions and has served its’ purpose for the benefit of millions of at risk individuals; currently it proves to be inefficient and too costly to continue to be maintained. For state’s such as PA who is weighing the choice to opt out of the Medicaid expansion plan, there needs to continued discussion for creation of backup policies that will be implemented in order to be able to continue to provide the services needed by generating enough revenue for a budget that will not continue to mean more program cuts in other areas such as early childhood education.

References
Carpenter, K. (2013). Medicaid in Pennsylvania. Retrieved on August 15, 2014, from http://www.transforminghealth.org/gettingcovered/2013/12/medicaid-in-pennsylvania.php
Holahan and McMorrow. (2012). Medicare, Medicaid, and the Deficit Debate. Retrieved on August 9, 2014, from http://www.urban.org/UploadedPDF/412544-Medicare-Medicaid-and-the-Deficit-Debate.pdf
Kaiser Family Foundation. (2013). Medicaid and Its Role in State/Federal Budgets & Health Reform. Retrieved on August 9, 2014, from http://kff.org/medicaid/fact-sheet/five-key-questions-and-answers-about-medicaid/
Kliff, S. (2012). The State of Medicai (in charts!). Retrieved on August 15, 2014, from http://www.washingtonpost.com/blogs/wonkblog/wp/2012/07/17/the-state-of-medicaid-in-charts/ Longest, B., Jr. (2010) Health policymaking in the United States (5th ed.) Chicago, IL: Health Administration Press, p 93-94. Pennsylvania Democrats. (2014). Our Party. Retrieved on August 10, 2014, from http://www.padems.com/content/about Stelle, E. (2102) Pennsylvania Medicaid Spending and the Affordable Care Act. Retrieved on August 15, 2014, from http://www.commonwealthfoundation.org/research/detail/pennsylvania-medicaid-spending-and-the-affordable-care-act
U.S. Department of Health and Human Services (2010). Medicaid: A Program Overview. Retrieved on August 15, 2014, from http://www.policyalmanac.org/health/archive/hhs_medicaid.shtml