Roundhouse

Roundhouse

When the state Legislature passed a major budget bill last week, lawmakers say they believed they were sparing Medicaid from any cuts, but now, Gov. Bill Richardson says implementation of House Bill 17 will force the him to include Medicaid in agency cuts.

Richardson says the wording of the bill makes some Medicaid services vulnerable. The bill says that the governor must cut 7.6 percent of spending in state agencies under his control. But, legislative analysts say, that doesn’t mean he has to cut every program or every agency by 7.6 percent; some may be cut more or less at his discretion, as long as they add up to 7.6. So even if the wording of the budget bill is confusing, they say, the governor still has the power to protect Medicaid.

“Despite assurances from legislative leaders, such as Sen. John Arthur Smith, that Medicaid programs would survive budget cuts relatively unscathed, the state Human Services Department has found that the opposite is true,” Richardson’s office posted on the governor’s blog on Tuesday. The same day, a press release from the Human Services Department detailed the cuts, services for children, the developmentally disabled, seniors and those with HIV/AIDS would all be affected.

“We didn’t think we were cutting Medicaid programs,” State Rep. Lucky Varela told the Independent. “Our intent and the governor’s wish was that Medicaid be saved.”

The governor does not agree. He says the bill ties his hands. “If you read the bill, there is no latitude. The Legislature ducked its responsibility, and now the governor is cleaning up the mess,” Richardson spokesman Gilbert Gallegos told the Independent Wednesday.

Is the whole Medicaid department protected? Or just one program?

During the 2009 regular session, the state Legislature divided the Medicaid budget into three parts (pages 129-131): Medicaid Physical Health, Medicaid Behavioral Health and Medical Assistance. And last week, it appears that the Legislature protected only one of them in its budget fix.

Richardson’s blog post indicates the current problem could be a matter of  ”unintended consequences” related to that change.

After the Legislature’s splitting of the budget, the Human Services Department negotiated a compromise, and the agency now uses two budgets in practice —separating out only behavioral health. And the language creating three budgets remains in the old bill.

“The bottom line is HB 17 applies the 7.6 percent budget cut to two major portions of the Medicaid budget — the Medicaid Physical Health managed care; and the Behavioral Health services — slicing nearly $38 million in state funding,” the blog post said.

Gallegos told the Independent that case law says the governor has to interpret the bill passed last week assuming that the legislature knows its own laws. Because it didn’t reference those two Medicaid programs, that indicates they should be cut along with everything else.

Still, the intent of the law is pretty clear to Legislative Finance Committee analyst Cathy Fernandez, who  helped to write the fiscal impact report on the bill . The exception for the medical assistance program could be interpreted as being about the entire medical assistance division of the HSD, which administers the Medicaid programs, she said.

The wording of the bill may be more fuzzy than is desirable, she acknowledged. But the numbers used to derive the 7.6 percent executive agency cuts mandated by the Legislature aren’t fuzzy, she continued, and they don’t include any Medicaid funds.

When lawmakers added all of the agency budgets together, they excluded $601 million in Medicaid funds from the HSD budget. Of the resulting $1.2 billion found to be under the governor’s control, he was instructed to cut $93 million, or 7.6 percent. The fiscal impact report on the bill, which was prepared by the Legislative Finance Committee, reflects these numbers, as does a budget supplied to the NMI by the LFC, showing how they derived the figure of $93 million.

The law clearly directs the governor to reduce executive agency budgets by an “aggregate” amount, Fernandez told NMI, without telling him how to do it other than a few exceptions.

So if he interprets the bill as exempting only a portion of Medicaid, he could choose to hold all of Medicaid programs harmless himself, she continued.

“He does have pretty broad discretion. The exemptions are telling him what not to cut up to 7.6 percent. At the end of the day, he interprets the law the way he wants,” she said.

“There is a major difference between intent and the actual bill that passed. Legislators also claim their intent was to avoid employee furloughs, but there is no way to make the cuts outlined in the bill without severe cuts to services and furloughs,” Gallegos countered.

Cuts to Medicaid would include federal matching funds

According to the HSD, a reduction in state Medicaid funds of almost $38 million would eliminate $115 in federal Medicaid matching funds, reducing the Medicaid budget in total by almost $153 million.

“For every state dollar cut through the 7.6 percent reduction to department’s budget, the state loses three dollars in federal funds,” Acting HSD Secretary Katie Falls said in a statement released this week.

The Medicaid Physical Health budget contains the SALUD! program, which provides health care to 360,000 low-income children and families, plus developmentally disabled individuals, medically fragile individuals and those with HIV/AIDS. It also contains the State Coverage Insurance (SCI) Program that covers low-income adults between the ages of 19 and 64.

The Medicaid Behavioral Health budget provides mental health and substance abuse services to all of 450,000 low-income New Mexicans who are enrolled in the Medicaid program.