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AP News

Ark. Medicaid faces 'significant' cuts in services

LITTLE ROCK, Ark. (AP) — The director of the Arkansas Department of Human Services said Tuesday that the state's Medicaid program faces "significant" cuts next year because of an expected shortfall of at least $100 million, even if lawmakers agree to a proposal to increase funding and use one-time money to help the agency.

The Department of Human Services told members of the Joint Budget Committee it needs $359 million in additional general revenue for the state Medicaid program, which serves nearly 800,000 Arkansans, but Gov. Mike Beebe has proposed only $160 million in new money for the program. Beebe has proposed boosting the program's funding by $90 million and using $70 million from the state surplus to help.

DHS Director John Selig said the shortfall will be lower than the nearly $200 million gap between its request and Beebe's recommendation, crediting a smaller than expected growth in the program's costs and other savings. Selig, who planned to detail the new shortfall figure Tuesday afternoon, would only tell reporters it would be at least $100 million.

"The good news is we have made some significant progress on our Medicaid shortfall," Selig told the panel as it opened its hearing on the department's budget. "We've still got quite a ways to go, and we're facing some very significant reductions in Medicaid."

Selig planned to discuss those cuts with lawmakers Tuesday afternoon and said they would affect some optional programs for the elderly and disabled.

"Some of it is not that difficult, but some of it is really some tough cuts," Selig said.

The latest budget figures came out a week after Republicans won control of the Arkansas Legislature for the first time since Reconstruction. GOP leaders have said they want to address the shortfall before taking up a proposal to expand Medicaid under the federal health care law.

Republican Rep. John Burris of Harrison called the figure "staggering," noting that lawmakers are expected to spend most of next year's session focusing on Medicaid.

"This is the elephant in the room we've all been waiting for," Burris said.

Beebe, a Democrat, supports expanding Medicaid's eligibility, which would add about 250,000 people to its rolls in the state, but has noted that its approval will require the support of three-fourths of the House and Senate. Under the federal law, the federal government agreed to pay the full tab for the Medicaid expansion when it begins in 2014. After three years, states must pay a gradually increasing share that tops out at 10 percent of the cost.

The U.S. Supreme Court's ruling in June upholding the federal overhaul gave states the right to opt out of the expansion. The proposed budget does not include the impact of a possible expansion, DHS officials said.

Selig said the new shortfall figure would factor in savings from the state's efforts to change the way Medicaid pays for services.

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