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State lawmakers adjourned their special session June 4 without agreeing to a way to fund the state’s Medicaid system, which faces a $90 million shortfall for the current fiscal year, which started July 1.

Projections say the state will also have to seed the program with between $225 and $250 million for fiscal year 2008-09.

The lawmakers were scheduled to reconvene June 26 — after a three-week break — to once again address the issue.

The situation is critical for hospitals and the citizens who rely on Medicaid for their healthcare coverage. The federal government provides $3 for every $1 the state puts into the health program that serves about a fourth of the state’s population, including the needy, aged, disabled and low-income families with children.

The shortfall arose when the federal government changed its reimbursement procedures last year.

At issue is the failure of the House, Senate and Gov. Haley Barbour to agree on how to fund the program. Barbour has proposed restructuring the taxes hospitals pay for the program, but the House would rather see the tax on tobacco products and liquor increased, or the state’s rainy day fund raided. Mississippi has one of the lowest cigarette taxes in the nation, at 18 cents a pack. Barbour is a former tobacco company lobbyist who is opposed to raising the tax.

The rainy day fund provides a financial cushion for the state, and officials said that on July 1 it would have $378 million and would be full for the first time in several years.

Barbour said he hopes the House will approve the hospital tax plan, which the Senate has already approved. Senate President Pro Tempore Billy Hewes (R-Gulfport) told the Associated Press that “it’s very doubtful” the Senate would consider the House proposals.

But the day the legislators adjourned, 23 of the Senate’s 27 Democrats released a statement that said they would support a cigarette tax as the first step to fund Medicaid before a hospital tax is implemented.

The week before the special session adjourned, the House killed a bill that included a 1 percent sales tax on wine and hard liquor and an increase of 82 cents in cigarette excise taxes. The next day, the House debated changing the cigarette tax increase to 50 cents a pack, but it was defeated 64-47.

On May 30, Barbour issued a statement regarding the House vote that said: “I thank the members of the House who voted to support the Mississippi Constitution by voting against bills that were outside the scope of the call for this special session. A fair and reasonable solution to fully fund Medicaid has been passed by the Senate with the supporting majority of both Democrats and Republicans. This bill is supported by the two organizations that know the most about and have the largest stake in the issue, the Mississippi Hospital Association and the Division of Medicaid.”

Barbour has said in the past that if legislators don’t accept his tax plan, he will slash millions from Medicaid and the cuts could put some hospitals in financial trouble. He said he is asking Medicaid officials to look for ways to cut $365 million from the budget in July, which should cover the shortfall. He said the cuts would primarily affect hospitals rather than other Medicaid services such as nursing home care or prescription drugs.

Barbour and the Mississippi Hospital Association unveiled a plan for hospitals to pay a single new tax to replace three old taxes. The new tax would be based on days of patient care in a hospital. The governor’s plan received only 45 votes in the Senate, and although it passed, House leaders said it has no momentum.

The Mississippi Hospital Association paid a consultant $350,000 to come up with the new tax formula.

The state was told by the federal government several years ago to stop using part of the Medicaid formula that has been in place since the early 1990s, but the state has not fixed the problem. Instead, it has used other funding sources to fund the program, including millions the federal government sent after Hurricane Katrina devastated the state in 2005. The temporary solutions ran out this year.

The special session has cost taxpayers more than $250,000 so far for both chambers.

Sen. Joey Fillingane (R-Sumrall) predicted in an earlier interview with Mississippi Medical News that there will be an agreement.

“It’s incumbent upon the Legislature and governor to fund Medicaid,” he said.



July 2008

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