House goes along with Senate's Medicaid plan; Beshear vows to veto spending cuts

The fact that the Kentucky House of Representatives voted tonight to accept the Senate Medicaid's plan is surprising. After all, Speaker Greg Stumbo said the House would not accept any spending cuts, particularly to education.

But wait, don't get your hopes up...

The House accepted the Senate plan only after Gov. Steve Beshear promised, apparently in a letter read today on the House floor today, to use his line-item veto authority to axe out spending and accountability measures is, unfortunately, not.

Apparently, the governor doesn't believe he can achieve the savings he promised. Otherwise, he would have gladly embraced the Senate's call for independent verification of what are sure to be future claims he will make about the great savings accrued from his managed-care approach to Medicaid.

Currently managed-care contracts are not even in place, and there is little chance the governor will be able to find the nearly $425 million in savings needed to plug Medicaid's budget by the end of next year.

Rep. Jim DeCesare, R-Bowling Green, praised the Senate substitute for House Bill 1, passed largely along party lines on the Senate floor today (this after earlier versions had picked up bipartisan support).

"It is a responsible plan that trusts, but also verifies," DeCesare said in a statement. "The plan, which credits the Governor for savings already achieved, fully funds Medicaid services this year while protecting the taxpayer and holding the Governor accountable through independent evaluation of his actions."

The Senate plan would have enacted small spending cuts over the next fiscal year -- 1.74 percent, across-the-board reductions next year -- but did allow those cut funds to be reinstated once an independent accountant and representatives from the state's Consensus Forecasting Group had certified his claimed savings. In return, it allows some borrowing from next year's Medicaid budget to balance this year's checkbook. At least $139 million is needed to plug the hole.

The cuts would have amounted to $23.5 million for K-12 education and $23 million for higher education.

Also, it would have restricted the amount of debt restructuring (delaying payments on the interest, or, as this governor has even done, the principal payments on loans) to the amount originally agreed to by legislators in last year's budget session -- about $202 million.

Ignoring the wishes of the people's representatives, the governor not only has restructured nearly the entire amount, but the House version of the Medicaid fix would have allowed him to keep those monies.

Apparently, the governor thinks he can get by with this. However, the November election indicated voters were wary of "borrow-and-spend" policies in Washington. The question: Will the same folks who sent fiscal hero Sen. Rand Paul to Washington catch on in Kentucky?

Beshear's letter indicated that he planned to veto all of the legislation's safeguards, leaving him with the all the money and no accountability," DeCesare said.

"Besides being a cynical move, it leaves the people of this Commonwealth holding the bag again, because come next year even deeper cuts will have to be made," he said.

Of course, those cuts won't occur until after Election Day.

For more on Kentucky's Medicaid program, visit the Bluegrass Institute's transparency site here.