The hidden danger hanging over planning for a state budget is the uncertainty of federal dollars, particularly Medicaid.
“I think we’re in an environment which we want to continue, sort of holding the line as best we’re able on discretionary spending here in West Virginia,” House Speaker Roger Hanshaw, R-Clay, said on MetroNews’ “Talkline.”
“The thing we’re most concerned about, though, is what decisions being made in Washington, D.C., find their way here to West Virginia, specifically things like Medicaid funding.”
This is a financial cloud that stretches from Washington, D.C., to the hallways of the state Capitol in Charleston to rural medical centers around the state.
The U.S. House of Representatives narrowly passed a budget resolution that could open the door to $880 billion in cuts to spending with Medicaid as a big possibility for those dollars.
Overall, the resolution mandates $2 trillion in spending cuts over 10 years. The Republican majorities in Congress are looking for the big budget savings to meet their goal of fully extending President Donald Trump’s 2017 tax cuts.
The budget plan assigns the U.S. House Energy and Commerce Committee to find $880 million in savings, and one of the biggest programs under its authority is Medicaid.
Medicaid is a joint federal and state program for health insurance and medical services, traditionally for low-income people but more recently also for the working class.
Medicaid spending in West Virginia changes year to year, depending on factors like the eligible population. But generally Medicaid spending in West Virginia has been more than $5 billion — with about 80 percent of that coming from federal dollars.
As of this month, 503,637 West Virginians were supported by the program, according to a state budget overview for the West Virginia Department of Human Services. That’s just under a third of all West Virginia residents.
“So providing for health care for West Virginians is a gigantic part of our overall budget. Our Medicaid spending here is a huge component of our overall state spend. What is Washington, D.C., going to do with Medicaid funding, and how does that impact our Medicaid budget here in West Virginia?” Hanshaw said at the midpoint of the legislative session.
“So we’re keenly interested over the course of the next 30 days, and what comes out of Washington, D.C, with those kind of impacts to discretionary spending.”
‘We need to be very cautious’
Over the second half of West Virginia’s regular legislative session, lawmakers will focus more on the specifics of the state budget for the coming fiscal year.
The session began with the Morrisey administration identifying a $400 million budget gap, which it has proposed to resolve with a mix of some cuts, the use of some remaining surplus dollars and funding sources like excess lottery proceeds.
Among the drivers of that financial strain are aggressive income tax cuts, rising costs of health insurance for public employees and the state’s share of Medicaid.
House Finance Chairman Vernon Criss, R-Wood, said the uncertainty around Medicaid funding could emerge as a significant issue.
“That’s a big item for a large group of people,” Criss acknowledged on “Talkline.”
And yes, right now, based upon the information we have right now, we need to be very cautious, because even though our budget year starts July 1, and the federal budget starts October 1, we’re not sure based on the information we have had from our federal elected officials from West Virginia, we’re not sure where their dollars are going to be.”
Criss concluded, “So we need to be very cautious about spending and and we need to change our spending attitudes at the Department of Human Services.”
Criss has concerns about the possibility of Medicaid costs soaring into the future — as well as the possibility of more immediate financial impact.
“The Medicaid program, based upon their six year projections that this administration has put forth, we could see another 60% increase in Medicaid. And where are those dollars going to come from?” Criss said.
“You know, it’s going to be very difficult if we don’t get a handle on this right now and especially with the federal administration taking a look at Medicaid, as hard as they are, that we may be in not very good shape come this fall.”
‘Rippling effects through the state’s economy’
Many of West Virginia’s healthcare providers depend financially on public sources of coverage like Medicaid.
For the average hospital in West Virginia, 21% of the patient population is covered by Medicaid, said Jim Kaufman, president of the West Virginia Hospital Association.
“And this is one where there’s a lot of threats in D.C. right now about cuts to the Medicaid program, changes in the federal matching percentage,” Kaufman said on “Talkline.”
West Virginia has one of the highest federal Medicaid matching rate in the country, he noted, with the state putting in roughly a dollar for every three dollars from the federal government.
“So think about that. That has a huge rippling effect on this state’s economy, and all the threats that they’re talking about in D.C. would have a tremendous impact on the entire delivery system,” Kaufman said.
“Because when you recruit a doctor or a nurse or a phlebotomist, they’re not treating just a Medicaid beneficiary they’re treating everybody. But if those dollars disappear, it impacts the entire delivery system.”