Medicaid funding is major woe

Friday, April 8, 2005

While national attention is focused on Social Security funding, an even greater financial burden is threatening the future financial health of the state and nation.

The problem is funding for Medicaid. The magnitude of the funding dilemma is described by Martha Stoddard, a reporter for the Omaha World-Herald. In the lead article in Tuesday's Midlands section, Stoddard writes: "The (Medicaid) program has been growing faster than any other portion of the state budget for 20 years." She goes on to explain, "During that period, Medicaid spending by the state increased an average of 11.5 percent annually, compared with a 6.2 percent annual increase for the state's overall general fund budget."

The result of these sharp increases is that Nebraska spent $1.3 billion last year to cover the costs of Medicaid, including $400 million from state tax money. If the trend continues, Medicaid will consume about half of the state's tax revenues by fiscal year 2013-14, according to State Sen. Phil Erdman of Bayard.

You heard that right ... in as little as eight years' time, half of the state's tax receipts would go for Medicaid expenses. That would mean Medicaid costs would far outreach all other spending obligations, including the state's responsibility for funding public schools, community colleges, state colleges and the Nebraska university system.

Unless bold steps are taken soon, the effect of the Medicaid increases could be devastating, not only on the state and national level, but also in the towns of Southwest Nebraska and Northwest Kansas, as well as communities all across the land.

To realize the huge impact of Medicaid on the local level, consider the revenues of the area's nursing homes, including Hillcrest Nursing Home in McCook. On average, half or more of nursing home revenues come from Medicaid.

Medicaid also provides a portion of the income for hospitals, although the amount is far less than the local hospital's costs for providing services to Medicaid patients. According to Jim Ulrich, vice president of finance and support at Community Hospital in McCook, the hospital provides $1.9 million annually in care and services to Medicaid patients. However, less than 25 percent of that amount is reimbursed by Medicaid, meaning that the hospital has to absorb the remaining $1.5 million.

Something needs to be done soon to face the Medicaid problem before it gets completely out of control. A starting point is a plan by Sen. Erdman to have a Medicaid reform plan drafted before Dec. 1 of this year. Amendments to his plan call for a 10-person advisory committee, a series of public hearings and monthly reports to the public.

Any or all of these legislative ideas point Nebraska in the right direction. We need to face up to the Medicaid funding problem, and we need to do so as quickly as is prudent and possible.

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