Branstad Worries About Iowa's Growing Medicaid Costs

By Rod Boshart, Reporter

DES MOINES, Iowa – Gov. Terry Branstad expressed concern Monday that government health care programs such as Medicaid are taking a larger bite out of the state budget.

Branstad said the federal formula for calculating Medicaid cost shares is penalizing states like Iowa that have growing economies by shifting a greater share of program costs from the federal government to state budgets.

"If your economy is in the tank and your state is badly managed, you get more money," he said. "That's not the way we want to run things in Iowa."

Branstad noted that Medicaid used to make up about 12 percent of the state budget when he was governor in the 1990s, but now it is approaching 18 percent and could go higher under federal plans to expand the program's coverage in fiscal 2014.

Under the current formula, he said, Iowa's share of providing Medicaid services will grow by $57 million in fiscal 2014 and by $31 million in fiscal 2015 independent of federal plans under the Affordable Health Care Act to expand Medicaid to another potential 140,000 recipients in Iowa.

"We're concerned that Medicaid has been the biggest growing cost to state governments," said Branstad, who has joined with other governors in seeking flexibility in instituting federal health reforms in order to avoid extra state spending. He said his administration is "very careful and cautious about buying into federal mandates" that may not be affordable as the president and Congress work through so-called federal cliff financial challenges to cut national deficit and debt.

"This is a Cadillac program. The problem is it is a rusted-out Cadillac," Branstad said of the current federal Medicaid cost-share approach with states. "We'd like to be able to have a new program that we could together consistent with our philosophy of being the healthiest state where we partner with people and people contributed some to their own health, and then the state also assists them as opposed to a federal program -- which is an entitlement where it's the government's responsibility and I have no obligation or responsibility for my own health. That's something we're trying to change."

State lawmakers, who knowingly underfunded the state Department of Human Services (DHS) budget for the current fiscal year due to a dispute over abortion funding, will be asked once they convene the 2013 session in January to pass up to $40 million in supplemental funds for the current year that runs through June 30.

The two-year DHS state budget request – approved by the Iowa Council on Human Services -- seeks an 11.7 percent funding boost in 2014 and a 7.9 percent hike in fiscal 2015, but DHS officials note that the figures are somewhat skewed by the underfunding issue, the state takeover of some county mental health costs, and a drop in the federal Medicaid match rate that will shift costs to the state. Without those factors, the DHS proposed increase in state general fund appropriations for fiscal 2014 would have been between 3 percent and 4 percent.
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