The agency that provides health care to about 2 million Georgians is requesting almost a $400 million increase in its state budget next year.
The request is not totally because of the COVID-19 pandemic but, in part, in anticipation that things will be closer to normal when fiscal 2022 starts July 1.
“We are basing those assumptions on the (expenditure) growth we had before COVID,” said Lisa Walker, chief financial officer of the Department of Community Health.
Walker said increased costs are expected for the poor and disabled on Medicaid if the pandemic eases because patients have chosen to forgo or delay care. Officials have seen the same thing nationally, as patients delayed procedures due to fear of infection or other reasons.
But pent-up demand for medical services and the expiration of extra federal funding approved because of the pandemic could drive a big increase in state Medicaid spending.
State agencies are preparing budget proposals for the governor and the General Assembly to consider when the 2021 legislative session opens in January.
The General Assembly in June approved a state budget for this year that included $2.2 billion in spending cuts because tax collections were expected to be down due to the recession brought on by the pandemic.
While the jobless rate has improved since Gov. Brian Kemp reopened the economy, it remains high. Many businesses either didn’t reopen or haven’t reopened to pre-COVID levels, and more layoffs and furloughs are expected in coming months.
A poor economy generally means a tight budget because most of state government’s revenue comes from income and sales taxes.
However, Georgia has done better than many other states, and Kemp is counting on a continued rebound next year. So he told state agencies — which do everything from help pay teacher salaries and run universities to patrol highways, house felons and build roads — that they wouldn’t have to continue cutting their budgets in fiscal 2022.
Agencies with rising expenses brought on by increased enrollment or use of their services were OK’d to ask for more money.
The Department of Community Health is one of them. Besides serving the nearly 2 million on Medicaid, it runs the health insurance plan for more than 660,000 teachers, state employees, retirees and their dependents.
Enrollment in Medicaid and PeachCare, the program for uninsured children, has increased by 223,000 from March through July during the peak of the COVID-19 crisis, according to the web site George Health News.
The program has benefited greatly from an increase in federal Medicaid funding approved by Congress in March as the pandemic started to make an impact on the United States. That increased federal contribution goes away when the emergency declaration is lifted.
The federal government pays for the majority of the Department of Community Health’s spending. Its budget, when including federal funding, is the largest in state government.
Besides presenting the DCH budget proposal, Walker on Thursday gave the agency’s board a briefing on the financial status of the State Health Benefit Plan, which covers teachers, state employees and retirees.
The board two weeks ago agreed to increase premiums next year, on average, by 5%.
Money for the program comes from premiums and the government.
The DCH said the program had a reserve of about $3.1 billion at the end of June, but that expenses would exceed revenue for the next few years and the reserve would drop by one-third by mid-2023.
The teachers, state employees and retirees on the program keep a close eye on its finances because lawmakers raided the reserve during the Great Recession to help the state balance its books.
DCH officials have projected massive shortfalls in the past, so teacher groups have expressed skepticism about the estimates.
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