Arkansas Medicaid Crisis Looms Despite $1 Billion In Stimulus Funds

Arkansas Policy Foundation: Arkansas policymakers face a potential $1.3 billion budget deficit in the state’s Medicaid program despite receiving $1 billion in federal stimulus funds for “health and human services” since 2009, according to remarks by officials and public records.

Gov. Mike Beebe and state Human Services Department Director John Selig said last month that Arkansas will have to either cut Medicaid or raise taxes to increase spending due to a projected shortfall in the government medical insurance program. The deficit could reach $1.3 billion due to the potential loss of up to $900 million in federal funds.¹

The federal government has awarded Arkansas $1,011,400,279 for “health and human services” under the American Recovery and Reinvestment Act.² There are 41 categories in the “health and human services category,” with three Medicaid-related programs awarded most of the amount, nearly $782 million. One “Medical Assistance Program” was awarded $318,917,521, the largest amount designated to any categorical. The description lists one objective of the program as follows:

“To protect and maintain State Medicaid programs during a period of economic downturn, including by helping to avert cuts to provider payment rates and benefits or services, and to prevent constrictions of income eligibility requirements for such programs, but not to promote increases in such requirements.”

Two additional programs designate an additional $227,066,000 and $234,790,947 in stimulus funding for similar Medicaid-related programs.

Arkansas officials have not explained how they will identify the unfunded liabilities of Medicaid programs or continue spending at current levels when the stimulus ends.

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¹ Policy Foundation research memo (May 5, 2012), “Arkansas Medicaid’s Unfunded Liabilities”
² http://recovery.arkansas.gov/index.html

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Arkansas Medicaid's Unfunded Liabilities - Arkansas State Human Services Department Director John Selig said Arkansas will have to either slash Medicaid or increase spending due to a projected shortfall. Gov. Beebe said Medicaid cuts or new taxes are coming in FY 2014. The fiscal impact will be significant. Medicaid was 18.1 percent of the state’s $24.8 billion 2011 budget, and Selig contends Arkansas could lose up to $900 million in federal funding without additional state funding.

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