- The Washington Times - Thursday, May 8, 2003

ANNAPOLIS — Medicaid is the prime target for cuts being considered by state health officials as part of the Ehrlich administration’s plan to balance the state budget for the next two years.Health Secretary Nelson Sabatini said yesterday that decisions have not been made about where to trim the budget, but he expects his agency will be told to reduce spending by $150 million to $160 million.Medicaid will have to bear part of the burden because it makes up about 80 percent of the health department’s budget of almost $5 billion, he said.The Baltimore Sun reported yesterday that it had obtained an internal budget document from the health department listing potential spending cuts of $93 million in state funds and $66 million in federal funds.Mr. Sabatini confirmed existence of the document, which he said was a listing of “every possible budget cut that you could find. It is a working document.”“Then what you do is you start going through all of those options and say … this one is one that we should avoid at all costs, here’s one if we change it a little bit maybe it’s acceptable, here’s one we can consider,” the health secretary said.Gov. Robert L. Ehrlich Jr. will have to cut at least $135 million from the state budget for fiscal year 2004 to make up for revenue lost because of his decision to veto a tax increase on businesses proposed by the legislature.The administration also wants to impose spending cuts totaling about $500 million in the coming year to get a head start on balancing the fiscal 2005 budget that the governor will present to the legislature in January. The administration is expecting a revenue shortfall of about $1 billion in 2005, which begins July 1, 2004.When the administration revealed plans last week to cut at least $500 million from the 2004 budget, Paul Schurick, Mr. Ehrlich’s communications director, said it would be irresponsible not to get a head start on spending cuts and reduce the impact on the budget for 2005.House Majority Leader Kumar P. Barve, Montgomery Democrat, said yesterday the legislature passed a balanced budget for next year and the reductions proposed by Mr. Ehrlich were not needed. He was especially critical of the governor’s plan to veto the tax bill and at the same time cut the Medicaid program. That means Maryland will receive less money from the federal government, which pays a portion of Medicaid costs.”[Mr. Ehrlich] is proposing to let some corporations continue to hide their income in Delaware, and he is proposing to pay for it by cutting Medicaid, thereby forgoing federal money,” Mr. Barve said. “None of this makes sense, start to finish.”Part of the revenue in the tax bill would be raised by closing a “loophole” that allows corporations to avoid paying Maryland taxes by shifting some income earned in Maryland to shell corporations in Delaware. It also would impose a temporary surcharge on corporate income taxes and require health maintenance organizations to pay the same 2 percent premium tax paid by other insurance companies.Mr. Sabatini said something must be done to stem the rapid growth in the cost of Medicaid, which provides health care to low-income people. Medicaid accounts for almost $4 billion of Maryland’s $22.4 billion budget for fiscal year 2004.”In some cases, a family of four pays more in taxes to support the Medicaid program than it pays for its own health insurance,” Mr. Sabatini said.Mr. Sabatini was not alone in looking for ways to reduce spending. Heads of agencies and departments throughout state government were looking for potential cuts in their budgets that would be on top of $600 million in reductions approved by the legislature during the session that ended April 7.

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