Spending on Social Welfare Programs in Rich and Poor States. Final Report.. Other Federal Social Welfare Programs

07/01/2004

Prior to FY 2005 the DHS's Division of Economic Assistance administered the Medicaid Program. However, the Division of Medicaid operating within the office of the Governor determines the Medicaid eligibility for the poverty level aged and disabled and for nursing home residents. Mississippi's spending per Medicaid enrollee is below the national average for all categories of enrollees, with the exception of nonelderly, nondisabled adults. The state's Medicaid eligibility standards are close to federal minimums; therefore, cuts in Medicaid enrollment or benefits are difficult. Tobacco settlement funds were used to fund the SCHIP program and eligibility expansions for the aged and disabled, allowing small expansions of benefits and increases in some provider payment rates.

Political support for Medicaid and SCHIP is strong. First, the programs have strong and organized proponents, such as hospitals, nursing homes, and doctors. Nursing homes, for example, beat back a recent legislative threat to reduce nursing home coverage. Among child advocates, SCHIP is the primary focus. The strong lobbying has been one reason why the Medicaid program is so "codified" and the executive director of the Medicaid division has so little control over the program.

Second, many people are enrolled in the programs: 25 percent of the population is on Medicaid; 57 percent of the children are enrolled in Medicaid or SCHIP. Outreach for SCHIP expanded enrollment in the regular Medicaid program (every child in SCHIP brought two children into Medicaid).

Third, the Medicaid program's match rate (3 to 1) is very attractive. One administrator makes the argument that the program is an economic development issue. Mississippi has also used intergovernmental transfers with Disproportionate Share Hospitals (DSH) funding to maximize federal dollars. In FY 2000, intergovernmental transfers constituted over 40 percent of the state share. The state share is funded through intergovernmental transfers and participating hospitals keep a fixed percentage of the revenues thus generated. The state began a new Upper Payment Limit (UPL) program for hospital reimbursement in 2000.

For all these reasons, Governors pay much more attention to Medicaid than to other human services, and legislators generally have a good relationship with Medicaid officials. (By contrast, Human Services has had three directors in the last three years and has not had a good relationship with the state legislature.) In 1999, Mississippi was the first state to establish a health care trust fund with money from the state's tobacco settlement. Mississippi's tobacco settlement funds are all targeted for health, about two-thirds of which is allocated to Medicaid.

Although Medicaid has been fairly well protected through SFY 2004, the legislature made some modifications and cuts in reimbursements. Some reductions were made in benefits, such as those involving eyeglasses and prescription drugs. In SFY 2004, the state faced a $90 million deficit, which was helped by an increase by the federal government in the state's FMAP rate.

It has been hard for Mississippi to hold spending down in Medicaid. There is a growing number of elderly in the state, especially those over 85. Expenditures per enrollee have grown, largely among recipients who cannot be dropped, including the elderly, the blind and disabled, and cash assistance children. The state is still doing SCHIP outreach, which brings in Medicaid applicants.

Pharmacy costs have also grown enormously, though some cost containment efforts have been underway. Other major sources of growth in costs include nursing homes, outpatient hospital services, hospices, and home and community based waiver programs. The state's managed care initiative was not very effective in holding down costs.

As a result of Medicaid's protection and growing costs, the program's spending has taken a growing share of the state's human services budget. Its share of the budget grew from 69 percent in 1998 to 75 percent in 2003.

The SSBG is federally funded and gets little attention from legislators, according to an administrator. It is largely used to support protective services, family planning, mental health services among other programs. The grants go to the agencies rather than the particular programs-so the block grant, like TANF, has provided state officials greater flexibility in shaping their package of social programs. However, the SSBG has declined even in nominal terms, from $23.4 million in 1998, to $16.4 million in 2004. As noted above, 10 percent of the TANF grant is transferred to SSBG, all of which goes to programs aimed at child neglect and abuse.

The CCDF is, as noted above, partly funded with TANF dollars. Before recent cutbacks, the program was able to support low-income working parents or students below 85 percent of the state's median income. But the eligibility level has been lowered to 50 percent of median income. Child care for TANF clients is automatic for those who are working, and there is one-year transitional benefit. There are extensive waiting lists for child care subsidies, about 12 thousand in the fall of 2003.

The state relies very heavily on federal dollars for child care, either from the CCDF or the TANF grant. Although CCDF allows states to put up state matches and draw down additional dollars, Mississippi has never been able to draw down the entire match. To increase the state's match, the agency (Office of Children and Youth) has used expenditures for Mississippi's lunch programs, reading programs, and others as MOE expenditures for TANF and CCDF. Child care does have some effective advocates, but legislators have mixed attitudes, and few pay any attention to developmental or quality issues.

Of the several divisions in the Department of Human Services, only a few rely significantly on state funding. Youth Services gets 68 percent of its funds from state general revenues; Economic Assistance gets 26 percent from general revenues; Family and Children's Services get 13 percent; while all the other divisions get less than 10 percent of their funds from the state. Thus, this low fiscal capacity state is very vulnerable to changes in federal spending.

Spending pressures from Medicaid will continue and probably grow with the increasing number of elderly people in the state. Since education spending is also strongly supported, pressures will fall on nonhealth services and administrative expenses in the human service system if revenues fail to expand as fast as overall spending. The state's child welfare system is strained already, yet there are few prospects for additional support. Mississippi's funding of nonhealth services will continue to rely heavily on federal funding.

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