Medicaid Shortfall and Fix

Last June, we passed a two-year bipartisan budget that filled a $2.5 billion deficit, cut taxes, reduced government spending by $1 billion, and reformed public education. We made tough but responsible decisions, and as a result, our budget is in good shape. State agencies are spending within the confines of what was budgeted except for one: The Department of Health and Human Services. While we faced a $2.5 billion shortfall last year, we are looking at around a $240 million shortfall this fiscal year isolated in Medicaid.

More than half of that shortfall is because of things like penalties and liabilities from previous administrations that are owed to the federal government. That’s money that can’t be used the way it was intended – to care for patients and pay doctors.

In accordance with the North Carolina Constitution, we are authorizing the executive branch to use the following sources of funds, listed in order of priority, to meet the state’s obligations to Medicaid recipients through June 30, 2012.

1. Money already within DHHS – so long as the money taken will not create or increase obligations in the next year, borrow any additional funds, or further shirk the state’s responsibility to repay past liabilities
2. Funds from the Repairs & Renovations (R&R) Reserve Account that are currently allocated to DHHS
3. Projected 2011-2012 general fund reversions from all state agencies
4. Projected revenue over collections for 2011-2012 fiscal year
5. R&R Reserve Account for other state agencies

The NC Senate remains committed to making the tough and smart choices necessary to get our State’s Medicaid budget on track for the future.

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