State House leadership calls for end to Medicaid mandates

House Republican leadership has sent a letter to the Colorado Congressional delegation that calls for an end to federal Medicaid mandates. The letter from Speaker of the House Frank McNulty and Majority Leader Amy Stephens, R- Monument, calls on the delegation to work with the state to find a Colorado solution.

“The expansion of Medicaid has put Colorado in a difficult fiscal situation,” the letter reads, “Federal government mandates and inducements have encouraged growth and spending that is simply unsustainable and inconsistent with the principles of responsible budgeting.”

Republicans said they are concerned about the expansion of Medicaid coverage beyond its original scope and pointed to the Federal Government’s decision to cut the Federal Medical Assistance Percentage, a fund that reimburses states for Medicaid programs, from 59.7 percent to 50 percent.

“We must have a safety net to protect those Coloradans most in need, while avoiding the heavy-handedness that is constraining our state budget,”  McNulty, R-Highlands Ranch, said in a release. “Without providing program flexibility, federal Medicaid mandates will continue to force more money into the program at the expense of K-12 education and higher education.”

Republicans further drew attention to figures showing that Medicaid assistance now takes up 18 percent of Colorado’s General Fund with 553,407 people being served in FY 2010-2011, and said that under conditions where state revenues have fallen $625 million below what they were in FY 2007-2008 the long-term trend of Medicaid expansion is simply not sustainable.

“In a complicated Medicaid world that directs states to comply with new maintenance of effort and eligibility requirements every day, it is increasingly challenging to plan for and manage Colorado’s budget. We ask that you take the difficult but ultimately necessary steps to end the cycle that contains structural incentives for states to expand their Medicaid programs in perpetuity.”

The full letter can be read below:

U.S. Senator Mark Udall

United States Senate
328 Hart Senate Office Building
Washington, DC 20510
Dear Senator Udall:

We write this letter to express our concerns related to the cost of adopting, administering and implementing the requirements associated with federal health care programs – specifically, the Medicaid program. Medicaid was put into place during the 1960s to provide medical aid to a relatively small and well-defined group of welfare recipients who could not afford health insurance coverage. During recent years, Medicaid spending on the federal level has grown exponentially, increasing from $118 billion in 2000 to $275 billion in 2010.

The expansion of Medicaid has put Colorado in a difficult fiscal situation. Federal government mandates and inducements have encouraged growth and spending that is simply unsustainable and inconsistent with the principles of responsible budgeting.

As you know, these expansions are often founded upon the assumption that states, such as Colorado, are eligible to accept additional federal matching funds based on a formula called the Federal Medical Assistance Percentage (FMAP) in exchange for implementing federal Medicaid policies and regulations defined by Congress and the United States Department of Health and Human Services.

Pursuant to the policies put into place by H.R. 1586, the Education Jobs and Medicaid Funding Bill that was signed into law in August 2010, Colorado’s FMAP reimbursement for Medicaid services is scheduled to decrease from 59.7% to 50% on June 30, 2011. At this time, our state will be forced to operate a Medicaid program that has expanded significantly in recent years despite the fact that we will have fewer resources available to do so.

At a time when our state’s Fiscal Year 2011-12 General Fund revenue is expected to be more than $625 million less than it was in Fiscal Year 2007-08, the Colorado Department of Health Care Policy and Financing – whose primary mission is the administration of Colorado’s Medicaid program – is expanding and now takes up nearly 18% of the state’s General Fund budget. For the 2011-12 Fiscal Year, the department has requested funding to employ 312.5 full time employees, a 16% increase when compared to Fiscal Year 2008-09 staffing levels.

During the past ten years, Colorado’s Medicaid caseload has also skyrocketed. Between Fiscal Year 2000-2001 and Fiscal Year 2010-11, enrollment in the program has increased from 275,399 to 553,407 – a 101% increase. During this same period, Colorado’s population increased only 16%. Ultimately, the Department of Health Care Policy and Financing predicts that by 2020 there will be 339,200 more Coloradans enrolled in Medicaid than there were in 2010.

Although the challenge of meeting these obligations is significant and real, the purpose of this letter is not to request further extension of the enhanced federal match that Colorado currently receives.

Instead, Colorado needs an end to federal mandates on Medicaid funds, so that our state can craft our own program to meet the unique needs of our citizens most in need.

In a complicated Medicaid world that directs states to comply with new maintenance of effort and eligibility requirements every day, it is increasingly challenging to plan for and manage Colorado’s budget. We ask that you take the difficult but ultimately necessary steps to end the cycle that contains structural incentives for states to expand their Medicaid programs in perpetuity.

The mandates that come with accepting federal matching dollars have essentially created a situation that requires Colorado to cut two dollars from a Medicaid program in order to achieve one dollar of savings for our state’s taxpayers. This system is not sustainable. Working with you and the other members of our congressional delegation, we must find a solution that better fits our state’s needs and end the federal burden on our state budget.

Respectfully,

Frank McNulty, Speaker of the House
Amy Stephens, House Majority Leader

cc: U.S. Senator Michael Bennet
U.S. Representative Diana Degette
U.S. Representative Jared Polis
U.S. Representative Scott Tipton
U.S. Representative Cory Gardner
U.S. Representative Doug Lamborn
U.S. Representative Mike Coffman
U.S. Representative Ed Perlmutter

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