SID SALTER: Health Care Trust Fund headed to a zero balance

By Sid Salter

STARKVILLE – A new Republican governor and new Republican legislative leadership now face the same task that has confounded their Democratic colleagues when they had the reins of state government – finding a way to pay for Mississippi’s massive Medicaid program.
Medicaid is a $3.9 billion federal-state program that provides health care for the poor, the blind, the disabled and children. State taxpayers pick up about 20 percent of the overall costs of the program, or $763 million. Most of the rest of the costs are paid by federal tax dollars.
Historically, state lawmakers have authorized a more generous Medicaid program than they have funded with state dollars. But even with austerity measures like face-to-face reauthorizations during the Haley Barbour administration, rising health care costs and increased demand or eligibility for Medicaid driven by high unemployment and a protracted economic recession have caused the state’s Medicaid costs to steadily increase.
After an effort to expand Medicaid during the administration of former Gov. Ronnie Musgrove, the state began to scramble to cover the concurrent rising costs. Prior to 2005, some 28 hospitals paid into a Medicaid transfer program that was used to “draw down” more federal dollars. By 2009, Barbour demanded that the state’s hospitals help pay for Medicaid through fees that those institutions dubbed “the hospital tax.”
Lawmakers were in the political crossfire of Barbour’s war with the Mississippi Hospital Association over that funding mechanism, but they also found other ways to stop the fiscal bleeding. In 2004, they rejoiced with a $94 million federal reimbursement of a Medicaid “overpayment” for patients eligible for both Medicaid and Medicare.
In 2005, they used federal hurricane relief funds that Barbour negotiated to help pay for Medicaid. Then they used federal stimulus funds.
But as most taxpayers know, the Legislature had another source of funds they used to pay for Medicaid – the state’s Health Care Trust Fund. After the state’s $4.1 billion dollar tobacco settlement, the HCTF was established on July 1, 1999, with the initial deposit of $280 million in tobacco settlement funds. Left alone, the HCTF would today contain well over $2.4 billion in principal earning as much as $100 million in annual interest payments to spend on public health care in the state.
Yet today, the HCTF currently has a balance of $97.4 million. The Legislature appears set to spend it all to prop up the state’s troubled budget.
Some have tried to blame the depletion of the HCTF on Republicans in general and Barbour in particular. The facts contradict that posture, as confirmed by former Democratic Attorney General Mike Moore in a 2010 interview with this writer: “It hasn’t mattered who was in office, Republicans, Democrats, Musgrove, Barbour, or who was leading the Legislature. It’s the greatest disappointment I’ve had in 20 years that they couldn’t resist spending it all.”
More than that, Democratic lawmakers defended the practice two years ago with many of the same arguments offered by Republicans currently about the need to spend the HCTF monies on health care. In 2010, state Rep. Robert Johnson, D-Natchez, didn’t dispute that lawmakers and governors had almost exhausted the HCTF in a bipartisan fashion. But he argued that the funds were spent in great measure on Medicaid.
Republican legislative leaders are likely to echo Johnson’s 2010 words during the 2012 session.
Sid Salter is a syndicated columnist. Contact him at 601-507-8004 or sidsalter@sidsalter.com.