Budget Vetoes Boost Medicaid, Add Intrigue

On May 28, Governor Charlie Crist signed the 2010-11 State budget into law. At the same time, however, he announced line-item vetoes eliminating dozens of specific items from the budget, many of which were controversial. It was a fitting “end” to a budget-setting process filled with twists and turns, especially since it isn’t quite the end of the process after all.  Of greatest importance to health care advocates, the Governor reversed two significant cuts in Medicaid payment rates to providers that had been approved by the Legislature last month.
 
Medicaid Cuts: From Inevitable Gutting to Unnecessary Whittling
To put this in context, discussions at the Capitol were dominated last winter by forecasts of a $2 billion shortfall for next year, with Medicaid taking most of the blame. Deep cuts to Medicaid seemed inevitable. Yet by the time the budget was fully formed, there was clearly enough revenue available to sustain Medicaid without making any cuts. Still, though legislators made no cuts to eligibility and few to direct services, they did make painful cuts in payments to already-strained providers such as nursing homes and hospitals.
 
Major Twist: “Cutting the Cuts”
Although line-item vetoes are almost always about cutting spending from the budget, in this case the Governor “cut the cuts”. He struck language that reduced payments to nursing homes and providers of services to the people with developmental disabilities (DD). This should wipe out $216 million in Medicaid cuts, although that money is not actually in the budget.
 
Governor: “It’s About the Most Vulnerable”
In his veto message, the Governor noted that nursing home payments had already absorbed cuts. More reductions would leave those serving the most Medicaid patients “at greatest risk of closing their doors and going out of business.” When striking the cuts to DD providers, he noted that “many providers will have to shut down operations and close their doors” without it.
 
GOP: “It`s About Getting Even”
Republican leaders expressed doubts about the Governor's motives, however. With the rift between them continuously widening, capped by Crist's defection from the party, they chalked it up to opportunism or even political payback. They also accused him of overstepping his legal authority to make some of the line-item vetoes. The Sun-Sentinel quoted House Speaker Larry Cretul (R-Ocala) as saying that the House would likely file suit as a result.
 
Congress: Additional Source of Uncertainty
Complicating the situation further is the now uncertain fate of the extension of the Medicaid stimulus funding (called “FMAP”) in Congress. The 27 months of extra federal funding will end in December. Congress once seemed certain to pass a 6-month extension, and the Legislature filled budget holes with the expectation that the money would flow. Now that outcome is in serious doubt. The impact to Medicaid would be limited, because the Legislature planned to again divert much of the money for unrelated purposes. Nevertheless, some of the money would go to ease cuts to the same hard-hit nursing homes and hospitals.
 
Even with the loose ends, when the new State budget year starts July 1, the Medicaid system will be stronger than many advocates thought might have been possible. But it`s not nearly as strong as it could have been and needs to be.