(Host) Governor Jim Douglas has proposed a major reform of the state’s Medicaid program as part of his budget initiative for next year. Douglas says the changes are necessary because the state can’t sustain current spending levels for the program.
VPR’s Bob Kinzel has the first of two reports on the budget address.
(Sound of House Chamber)
(Kinzel) There was great anticipation in the House Chamber as the governor prepared to outline his budget priorities for the coming fiscal year. The administration was contemplating cuts for many departments but a strong growth in revenue means those austere measures won’t be needed.
Douglas’ budget for next year represents a roughly five percent increase over the spending plan approved by lawmakers last spring. The governor identified several top priorities, including higher education, public safety, economic development and a program to help clean up Lake Champlain.
(Douglas) “So I come before you with a budget that is honest in its discussion of our challenges, creative in its possible solutions, compassionate in its commitment to our most vulnerable and balanced on the bottom line.”
(Kinzel) Douglas delivered a stern message concerning what he described as unsustainable growth in the state’s Medicaid program. The administration expects a $20 million deficit in the program this year and is projecting a $70 million deficit next year:
(Douglas) “Doing nothing is not an option. Like Tennessee, we’d be forced to cast thousands into the ranks of the uninsured, exacerbating our health care dilemma and leaving our most vulnerable unprotected. Raising taxes is not an option to cover these record deficits. We would need to levy dramatic tax hikes. Vermonters are already taxed enough and higher taxes would threaten to reverse our recent success at putting people back to work. The fact is we couldn’t raise taxes fast enough or high enough to solve this problem.”
(Kinzel) Here are the main elements of the governor’s Medicaid reform plan. First, it requires a federal waiver to give the state more flexibility in spending federal funds. It also increases premiums for most participants in the Vermont Health Access program and Dr. Dynasaur. It provides subsidies for uninsured people who have the opportunity to receive health insurance coverage from their employers. It cuts payments to providers by $21 million; this includes hospitals and doctors. And it implements an initiative to deliver more cost effective care to individuals with chronic illnesses.
(Douglas) “While the prognosis is severe the remedy is at hand to restore the financial integrity of these important services. My administration is proposing fundamental structural changes in the Medicaid program. Our strategy is comprehensive and forward thinking and shares the burden of these changes with all parties, participants, providers and government partners.”
(Kinzel) The governor also wants to use $20 million from this year’s surplus to help balance the Medicaid program next year.
For Vermont Public Radio, I’m Bob Kinzel in Montpelier.
Related link:
Governor’s Budget Address audio and text