Rep. Jason Petrie, R-Elkton, left, and House Majority Floor Leader Steven Rudy, R-Paducah, look over various proposals for the state’s next biennial budget, Jan. 16, 2024. (LRC Public Information)

Advocates and state officials, alarmed about cuts to Medicaid in the budget proposal approved by the Kentucky House Feb. 1, hope to make their case for changes as the Senate takes up the approximately $60-billion-a-year spending plan.

That begins Wednesday, with the Senate Appropriations and Revenue Committee scheduled to hear from Eric Friedlander, secretary of the Cabinet for Health and Family Services, and John Hicks, budget director for Gov. Andy Beshear.

“I’m quite nervous,” Friedlander said speaking during an online meeting Monday of the human service advocacy group ThriveKY. “Very nervous about Medicaid. … It looks like it’s going to be tough for us in ’25.”

Advocates worry the House plan could force cutbacks in Medicaid services or enrollment in the 2025 fiscal year that begins July 1 through more than $900 million in cuts to the amount sought by Beshear, a Democrat, in his budget proposal.

They also question whether it’s part of a broader plan Republican lawmakers, who hold a supermajority in the General Assembly, enacted in 2022 to phase out the state income tax as long as it meets goals including limits on spending.

“I don’t know of any other explanation,” said Jason Bailey, executive director of the Kentucky Center for Economic Policy, a non-partisan research and policy group. “Where do you find the money? Where do you cut? Now we’re seeing budget gimmicks.”

Bailey said that overall, the House plan cuts about $139 million in state funds Beshear sought for Medicaid in FY 2025, which would cause the state to forfeit another $783 in federal matching money for a total of around $922 million.

Rep. Jason Petrie, R-Elkton and chairman of the House budget committee, said in a Feb. 5 interview on KET’s “Kentucky Tonight” that triggering more income tax cuts is not the motive when it comes to funding state programs through House Bill 6, the budget bill.

Rather, he said, the key question is, “Is it a legitimate purpose of limited state government to take it on?” And if so, “What’s the optimal amount to make sure we have optimal and efficient services rendered to constituents?”

Beshear vowed to keep working with lawmakers to restore Medicaid funding. “We believe health care is a basic human right and we have worked to make sure all our families have access to care,” the governor said in a statement. “We will continue to work with lawmakers to restore the funding cut to this critical program, which supports our hospitals and provides health care services to more than 1.5 million Kentuckians, with more than half of those being children.”

One bright spot

The state’s $15 billion a year Medicaid program? provides health coverage for about 1.5 million low-income Kentuckians, individuals with disabilities and the majority of nursing home residents.

Kentucky legislature asked to end long, worrying wait lists for adults with disabilities

One bright spot in the House budget noted by advocates: It includes about $200 million — about $143 million of that in federal funds — for 2,550 new slots in Medicaid “waiver” programs such as Michelle P. that provide housing, therapy or other supports for people with disabilities.?

Waiting lists for such services number in the thousands for programs that generally have been increased by 50 or so a year.

Advocates are “very excited” to see that significant expansion in the House budget, said Sheila Schuster, executive director of the group Advocacy Action Network.?“That’s a whole lot more than we’ve ever seen.”

Mobile crisis cut ‘heartbreaking’

But the House budget plan also cuts $2.7 million in funds to launch a “mobile crisis” system for Kentuckians experiencing a mental health crisis, which means the state also would lose about $7.8 million in federal matching Medicaid funds.

Friedlander called that cut from the governor’s proposed budget “heartbreaking.”

Throughout Kentucky, he said, people have identified such a system to be urgently needed.

“I think it’s really important that we respond in local communities to folks who are in some behavioral health or substance abuse crisis,” Friedlander said.

But his major concern is the overall loss of funding for basic Medicaid health services in the first year of the two-year budget the General Assembly must approve.

Petrie, presenting the budget on the House floor, said that? it? assumes a decline in Medicaid enrollment following the COVID-19 pandemic and federal rules that required states to resume requiring annual recertification for enrollees. State figures show around 210,000 people have left Medicaid, some because they’ve found other coverage and others because they didn’t follow rules to recertify.

“We have less people that we’re serving,” Petrie said.

But Bailey said that the governor’s office, in its budget request to the legislature, already assumed a decline in Medicaid enrollment and he’s not sure whether the House estimate assumes even greater declines.

“Basically, they have not shared an explanation of what assumptions they used,” he said.

Petrie, in response to a question on the House floor, said he did not have the exact information available but said he was confident in the proposal.

No Medicaid cuts in FY 2026

The budget doesn’t propose any Medicaid cuts for Fiscal Year 2026.

Petrie said the House budget planners believe Medicaid enrollment will begin to increase after an initial decline and “we want to make sure that we’re fully funding for the services that are needed.”

But cutting that much in the upcoming budget year from the $15 billion a year program, which gets up to 80% of its funding from the federal government, would leave the state with few options for paying for health care, Bailey said.

“They’re going to face a choice,” Bailey said. “Do they reduce provider payments, do they cut services or do they reduce enrollment in some way to stay within the budget they’ve been given?”

Friedlander put it this way, speaking at Monday’s online meeting:

“If there’s not enough money for Medicaid, there’s not enough money for Medicaid and where does that money come from?”?