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Health and Family Services Cabinet
Medicaid Facing $675 Million Shortfall in Fiscal Year 2006; Federal Actions Have Large Impact on Budget

Press Release Date:  Monday, June 20, 2005  
Contact Information:  Vikki Franklin or Gwenda Bond, (502) 564-6786  

FRANKFORT, Ky. (June 20, 2005) -- The Kentucky Medicaid program is facing a $675 million shortfall in fiscal year 2006 due in large part to actions at the federal level, Cabinet for Health and Family Services (CHFS) officials announced today.

“The cost-saving measures enacted by the Fletcher administration to date are significant, but insufficient to solve the short-term deficits or long-term structural problems within Kentucky Medicaid,” said CHFS Secretary James W. Holsinger, M.D. “We are now facing a true Medicaid crisis in Kentucky—one that requires us to look at every option available to us to preserve Medicaid for the neediest, most vulnerable people we serve.”

Speaking at a news conference this morning, Holsinger said that the shortfall is largely driven by federal changes, such as the new Medicare prescription drug benefit, which requires payments from the state Medicaid program to the federal government, and policy interpretation changes related to fund transfers, among others. The total estimated impact of federal actions on Kentucky Medicaid is more than $375 million. 

“The growing national inability to sustain the Medicaid system at its current level is hitting Kentucky particularly hard,” said Shannon R. Turner, Medicaid Commissioner. “Let’s be clear: there are no easy solutions. We are continuing to work with the federal government to identify solutions that will allow us to fundamentally alter the way the Medicaid program operates, to enable us to provide a greater continuum of care more cost effectively."

The Fletcher administration saved more than $270 million in fiscal year 2005 through cost-containment actions largely related to the pharmacy benefit.

Secretary Holsinger said that Governor Ernie Fletcher has directed the cabinet to explore all possible actions to preserve Medicaid services for those who need them most and that the cabinet will seek input from legislators, advocates and the public on potential changes.

“We are examining every option in the hope of avoiding potentially painful changes to the Medicaid program. We must have an open discussion about the situation now facing Medicaid,” said Dr. Holsinger. “We believe strongly that quality care is more cost effective than poor care. Medicaid is a health plan—a health plan that serves some of our most vulnerable Kentuckians. We believe in taking care of Kentuckians and we understand that Medicaid makes a difference in people’s lives every day.”



Last Updated 6/21/2005