Elder Law of Louisville's Blog

Tuesday, March 8, 2011

Legislature Unable to Reach Agreement on Fixing Medicaid Budget

Two days of House-Senate Medicaid budget negotiations crashed Tuesday night, and it appeared the 2011 General Assembly would end chaotically without an agreement — a prospect that Gov. Steve Beshear warned could have dire consequences.

Senate President David Williams said his chamber would meet Wednesday, using the session’s 30th and final day, and that its leaders would be open to further negotiations with the House.  But if the Senate does meet, any negotiations would be aimed at producing an agreement only for a special session.  That’s because the House adjourned late Tuesday night until March 21 — the date that was to have been the session’s final day under the original legislative calendar.  Thus, with the Senate meeting Wednesday, the House would be unable to approve any agreement in the unlikely event one were reached. House Speaker Greg Stumbo did say House leaders would be available for negotiations Wednesday.
Gov. Steve Beshear warned that if the legislature fails to act he will have to immediately slash Medicaid reimbursement rates paid to health care providers by 30 percent, which he said would result in some hospitals and other providers closing their doors.  “This includes all of the small county hospitals, the nursing homes,” he said. “It will cause the closings of some of these small county hospitals, I'm told, and that will rest upon the head of those in the Senate who would not take action.”

Before the Senate announced that it would meet Wednesday, the governor said he opposed the idea of a special session.  “There is no reason for a special session,” he said. “They've got plenty of (time) to resolve these issues.”
The Senate’s decision to use the session’s final day on Wednesday means lawmakers will forfeit the chance to override any vetoes by Beshear.  That decision, communicated in a phone call from Williams to House Speaker Greg Stumbo, caught leaders of the Democratic-controlled House by surprise and angered them.  Stumbo, who called the decision unprecedented, said he expressed concern to Williams that one chamber convening would prevent lawmakers from being able to override vetoes since no session days would remain.

And in a fiery floor speech, House Democratic Leader Rocky Adkins of Sandy Hook said the Senate's proposed action “makes a mockery of the system.”  The legislature's business isn't finished, he said, “and when you don't get your way, you don't pick up your ball and go home.”

Senate Republican Floor Leader Robert Stivers said members would return Wednesday and complete whatever business they had left. He said members would be available all day for House leaders to discuss a compromise on the Medicaid issue.

Williams noted that by meeting Wednesday, and adjourning at the end of the day, the legislature is saving taxpayers $68,000 a day for the 12 days lawmakers would be paid if the session didn’t end until March 21.  “We have come to the conclusion that if we cannot reach an agreement with them (House leaders), why do we stay here and cause the people to stay here and incur $800,000?” Stivers said.

Williams made it clear that the Senate isn't backing away from its position on the Medicaid issue, and he laid the groundwork for a special session that he said should be called only after the House, Senate and Beshear reach an agreement.  “If we reach an accord, with the House and the governor, we can come back in special session for five days,” he said, noting that taxpayers would save money even if Beshear calls them back into session.

But Beshear said that shortly after the session ends, letters would have to go out to Medicaid providers, telling them that their reimbursements will be slashed by 30 percent, which he said could cause layoffs and worse.  He stressed that those in his administration “stand ready to work with the Senate.”
During talks near the end of the session's next-to-last day, each side blamed the other for the stalemate.
Six negotiating sessions over two days ended Tuesday evening with the two sides walking away from the table in frustration.  “We believe it would be fiscally irresponsible,” Williams, R-Burkesville, said of the budget-balancing proposal by Beshear that is supported by the Democratic-controlled House. 
“This should not have elevated to a political discussion. This should have been a discussion based upon the facts,” said Stumbo, D-Prestonsburg. “And the facts are overwhelming” that the Beshear-House plan will work.

At issue are two different approaches to House Bill 305, which would shore up the funding shortfall facing the state’s Medicaid health-care program for the poor and disabled.  The Beshear-House plan would solve the problem by moving $166.5 million, appropriated for the program in 2011-12, into the budget for the current fiscal year, which ends June 30.  Beshear has said the resulting hole in next year's budget will be filled by savings resulting from an enhanced “managed care” approach to Medicaid.
The Republican-controlled Senate says Beshear cannot — and will not — achieve those savings. The Senate has approved an approach that would cut state spending across the board, beginning in the fourth quarter of this year.  To fail to make definite cuts now, the Senate argues, would lead to much more serious budget problems next year.

Through negotiations that sometimes grew heated and often saw long, silent pauses, each side made compromise offers.  In general the House proposed to put certain anticipated state surplus funds into a reserve, which could be held to cover any shortfall Beshear fails to achieve next year in Medicaid savings.
The Senate proposed smaller cuts than it originally advocated last week. Williams proposed Tuesday a cut of 0.316 percent to programs except schools and universities this year, and a cut next year of 1.58 percent to all areas except schools, which would be cut by 0.65 percent.

But Stumbo said repeatedly that the House doesn’t believe there's a need to cut spending now.  Williams disagreed and pushed unsuccessfully for the House to accept other aspects of the Senate plan, such as reducing how much debt Beshear should be allowed to restructure on grounds that it raises costs in future years even though it saves money in the current budget.

If the legislature takes no action, Williams said Beshear will have to find a way to deal with the Medicaid funding shortage. 
“The governor still has the budget authority to meet the Medicaid expenditures now, and he'll just have to find that money,” Williams said.  But a failure to act causes other problems.

Williams said one non-controversial aspect of the bill would have transferred about $19 million from the 2011-12 fiscal year for universities to the current year to assure additional federal grant money for elementary and secondary education.  And Stumbo said the failure to transfer funds from next year to this one will cost the state about $12 million in federal Medicaid revenue because of a higher matching rate paid by the federal government this year.
The constitution requires that this session last no more than 30 days and must adjourn by midnight March 30.  If the Senate convenes Wednesday, as planned, it will be the final day of the session.  As for the hope of resolving the deadlock by the session's final day, Stumbo said, “I would hope that the Senate would go back and review the evidence ... and would reconsider their position.”  Said Williams: “We still hope that they (House members) change their minds.”
Courtesy Courier-Journal.

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