Gov. Haley Barbour was at the Neshoba County Fair on Thursday, July 31, speaking with local media. On the balcony of the cabin amidst the noise and heat Gov. Barbour answered questions presented to him by local reporters for about an hour. This is how the question/answer session went.

Press: What is your view on Medicaid right now?

Barbour: What has happened in 2005 the federal government changed rules about what we could count as part of the state matched medicaid. The state has to put up one dollar and the federal government gives us back more than three dollars. We are paying a little less than a fourth and since 1993 we have used that particular mechanism called an intergovermental transfer. The federal government decided not only Mississippi but a few other states were using that incorrectly, and of 135 million dollars we paid in 2005 through the intergovermental transfer, in the future 90 million of that would not be eligible to be counted as state shares. We now have a 90 million dollar hole in the budget that we fill with federal Katrina emergency health care money.

That money ran out this year and during the regular session of the legislature the legislature did not enact any resolution except to pass a deficit appropriation to cover the balance of the fiscal year that ended June 30, but they did nothing for going forward. I should add we don’t have a 90 million dollar budget hole because of over spending Medicaid. Since I have been governor spending has increased less than one percent per year, unlike the previous administration where it was going up 20 percent a year.

The problem is that rules change, I called the legislature back into special session among other things to deal with how we would fill the hole to fully fund medicaid. Back in May the senate passed a bill to fill the hole by enacting a hospital tax designed by the Mississippi Hospital Association they had asked for. They had said this would be the way they preferred to fill the 90 million dollar hole. The house never passed that or any permanent fair sustainable method for fully funded Medicaid, so we got to the end of fiscal year both our constitution and state law prohibited our running a deficit. There is a specific statute that requires the government to cut Medicaid spending in order to balance the Medicaid budget. When the end of the fiscal year came I said I would make those cuts, but there was a pending state court about this and the judge decided on July 10. On July 11 we announced the cuts, these cuts are very severe and bad for the system they are certainly nothing I won’t to go into effect but I took an oath to obey the constitution of the laws of Mississippi and I am going to keep that oath. We made that announcement on July 11, since then we think we have come up with a better way to make the cuts and do far less harm to our state health care system. Because of that we told the court in Jackson we were going to call off the hearing on Friday, because there was no use to have a hearing about something we were going to change. We have been negotiating and working with Medicaid in Washington. They have to approve anything we do and we are working with them for a better solution. We withdrew the cuts we announced on July 11 because we think we are going to be allowed by Medicaid in Washington to make the cuts in a much less harmful way, make no mistakes about it we have to make the cuts, unless the house decides to pass the senate bill, but since they haven’t done it in more than two months I assume they are not going to. If Washington approves what we are talking about, is consistent with existing state law and if it passes muster with the Feds then we can go on and put it into effect without any legislative action.

Press: When do you expect to have an answer?

Barbour: We should have one tomorrow.

Press: What you are talking about working with the Feds in a less harmful way, will this be a long term solution or kind of like in 1993 which is basically what we have done in Mississippi year to year.

Barbour: I wasn’t around but they began a provider fee system in 1993. The hospital asked to have a tax put on them because it would allow bringing down more federal money, then the nursing homes did the same thing. In 2001 the hospitals asked for another tax to be put on them, the gross revenue accessment, so they could draw down more federal money. In each one of those cases it was additionally, it wasn’t correcting something that was wrong, it was a way to get more in. The Musgrove administration in 2003, right after the start of fiscal year 2004, spent 70 million dollars and didn’t put it on the books, literally didn’t enter it on the accounts. Later when that was discovered it was a big mess that had to be cleaned up. That did happen in 2004 and in 2005 the federal government changed the rules about how you could use it, so we did have two years back to back that the legislature hasn’t dealt with it in the long term since 2005, I do believe since the early nineties, and until 2004 accounting failure of the Musgrove administration. I think it rocked along pretty well except they would figure out ways to add to the program.