Even without cuts, Medicaid and welfare programs are in the red

Friday, Dec. 14, 2007 | 7:24 a.m.

CARSON CITY - The financial woes of Gov. Jim Gibbons and his administration continue to escalate.

Although Gibbons has ordered 8 percent cuts for most agencies, two of the biggest programs - Medicaid and welfare - will need more money to get through these two fiscal years, with the number of people in both programs exceeding the 2007 Legislature's estimate.

Miki Allard, a spokeswoman for the state Welfare and Supportive Services Division, said the higher-than-expected number of people receiving Temporary Assistance for Needy Families is due to the "soft economy, the rising unemployment and housing."

For instance, the Legislature appropriated money for this fiscal year for 14,224 recipients of temporary assistance, but the number will actually be 21,000 to 23,000.

As for Medicaid, Charles Duarte, chief of the state Health Care Financing Division, said a "double whammy" is hitting the program.

The Legislature allocated enough money this fiscal year for 169,954 clients on Medicaid, the program that provides health care for low-income families and individuals. However, during the first three months of the current fiscal year the program was 100,000 "member-months" over budget. ("Member-month" factors in the length of time an individual receives benefits, so the total number of people involved likely is less than 100,000, given that many recipients could have been on the program for all three months.)

The additional recipients, Duarte said, will leave the Medicaid fund $25.8 million short during this biennium, based on the three-month preliminary estimate.

He said there is a reserve account of about $21 million that he can tap. The most challenging financial problem, Duarte said, will come in the biennium's second year, which starts in July. The next Legislature, which meets in February 2009, probably will be asked to act quickly to cover the expected fiscal 2009 deficit.

Worsening the financial picture, the federal government in the next fiscal year will cut its aid to Nevada's Medicaid program from 52.4 percent to 50 percent, which will cost the state about $20 million annually starting in July.

Despite having more clients than expected, the division still might have to produce a proposed 8 percent budget cut in both fiscal years.

The Legislature allocated $908.5 million for Medicaid in the two-year budget, with an additional $49 million going to the welfare grant program.

Nancy Ford, director of the state Welfare and Supportive Services Division, said the agency will need an extra $8 million this fiscal year and another $8 million next year. That shortfall, however, will be covered by federal money.