Kentucky Gov. Andy Beshear announced Wednesday he would reverse a 4% cut made to Medicaid reimbursement rates last month. Beshear said he is taking the funds from various sources including an oversized corporate tax payment in July and an unexpected budget surplus from the previous fiscal year.
“My administration will apply $255 million from these funds to close the Medicaid gap and reverse the General Assembly's cuts,” Beshear said at a Wednesday press conference. “This means the providers and services that our families rely on will not be at risk this year. There will be no 4% cut.”
Beshear, a Democrat, said normally the administration would have deposited the $350 million of unbudgeted corporate income tax payments and the budget surplus into the state’s Budget Reserve Trust Fund, often called the rainy day account.
“These dollars weren't expected by anyone, including the General Assembly, but now we can provide relief for those who rely on Medicaid while still investing in our state,” Beshear said.
Much like other cuts, the administration said the Republican-controlled General Assembly forced its hand by underfunding Medicaid. The cuts would have affected 46 different fee-for-service provider types, versus those who operate through Kentucky’s managed care organizations, the health insurance companies that administer Medicaid payments for the state.
The power of the purse rests with the General Assembly and governors don’t typically have the authority to move money between different parts of the budget and different years. Beshear said that he is interpreting statements from various lawmakers to give him just such authority.
“They say I could have avoided all these cuts; that somehow I'm creating them. Today, I'm taking them at their word, and I'm applying these dollars to reverse cuts and prevent painful impacts to our Kentucky families,” Beshear said. “We will see if their words were genuine or just politics.”
Republican House Speaker David Osborne of Prospect said GOP lawmakers provided the funding necessary to maintain essential government services and that Beshear has not proven why he needs more money. Osborne also accused Beshear previously of announcing cuts “just so he can appear to save the day.”
“Rather than frightening vulnerable Kentuckians — including children, individuals with profound disabilities, and seniors — with threats of cuts, it’s time to stop crying wolf and start managing Medicaid with the seriousness, transparency, and accountability Kentuckians expect,” Osborne said in a statement.
The 4% cut would have disproportionately impacted providers for Medicaid waiver programs specifically designed for individuals who are ventilator-dependent, those with intellectual or developmental disabilities and older adults with physical disabilities. The waivers are designed to allow Kentuckians who require long-term intensive care to remain at home or in their communities. Beshear’s reversal comes less than a week after Kentuckians with disabilities and advocates protested the cuts in Frankfort.
House and Senate Democrats applauded Beshear’s decision in a joint statement, calling it “brave and decisive action.” They wrote that the solution is short-term and called for further action in the 2027 session of the General Assembly.
“The concerns raised by families, providers and advocates remain, and the General Assembly must respond by ensuring Medicaid is fully funded in the second year of the budget,” the statement reads. “We, as Democrats, commit to re-opening the budget in January to fully fund Medicaid for the next fiscal year, and we call on our Republican colleagues to make that same commitment.”
It is not the first time Beshear’s administration has announced funding cuts and then, after an outpouring of support, announced alternate funds to plug the hole. Last month, Beshear announced cuts to foster care payment rates and the Temporary Assistance for Needy Families funds before saying he had found $30 million from other outdated programs elsewhere in the budget.
Then, the Beshear administration informed the Lee Specialty Clinic in Louisville that they were slashing the majority of their budget, a $4.5-million cut. A couple weeks later, Beshear said he had found the funds elsewhere to reverse the cuts that would have affected roughly 1,000 Kentuckians with intellectual and developmental disabilities.
The administration has made other cuts that presumably still stand, including to a few programs that serve those with intellectual and developmental disabilities.
Dr. Matthew Burchett, an optometrist in Richmond, said the reversal will provide reassurance to healthcare providers, especially those in rural areas, and ensure continued care.
“Maintaining a strong Medicaid program helps preserve the healthcare network that the rural families depend upon,” Burchett said, “and supports providers who are committed to caring for those patients close to home.”
*This story has been updated to include additional comments.
