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If the Medicaid program is forced to operate within a "flat budget" for fiscal 1990, Utah will face a $10 million shortfall in state funds, according to the latest statistics from the Utah Division of Health Care Financing.

A flat budget means a budget with no increases for inflation or cost of living adjustments.Rod Betit, director of the division, which is responsible for the federally and state funded program, said the Medicaid budget has already lost $21 million in the past three years. State dollars receive a three to one federal match.

A budget for fiscal 1990 that includes normal utilization, inflation for hospitals, nursing homes and pharmacies, and replacement of money that was "borrowed" on a one-time-only basis from the Utah Medical Assistance Program, would result in a shortfall of $5.7 million in the basic budget, Betit said.

In addition, services required by the recent, federally mandated Catastrophic Health Bill - which will have to be taken from the Medicaid budget - will cost $2.5 million in the basic budget for the program. And services ordered by the federal government in OBRA87, designed to improve nursing home care, require $1.8 million more in base budget.

"That's what we're facing before the tax initiatives," Betit said. Passage of the initiatives would take an additional $5.2 million in state funds (plus $14.9 million federal funds) out of the Medicaid budget.

The division has created a list of programs that will be reduced or eliminated entirely to maintain funding for mandated programs, which can't be cut. The list is not prioritized, according to Betit, and is designed to cover the "worst-case" scenario of a flat budget and passage of the initiatives.

Adjustments, as yet undecided, will be made if the initiatives fail or legislators approve a budget that is above the current funding level.

Among the proposed cuts:

-The Medically Needy Program, which provides limited health care for 6,000 Utahns who face life-threatening illnesses or injuries.

-Eligibility of fully half of the 4,600 currently in nursing homes through state funding should the state follow a proposal to limit assistance to those with incomes at or below the poverty level.

-All optional services, affecting 50,000 Utahns.

-The organ transplant program, which benefits up to 20 Utahns - mostly children - every year.

The final possibility on the list is elimination of the Utah Medical Assistance Program, which would leave 6,600 participants without recourse for critical health care.

Cuts made by the Health Department could effect the Department of Social Services, which by law must provide some of the services currently offered through Medicaid, UMAP and the Medically Needy programs, according to Norman Angus, department director.

Cindy Haag, director of the Assistance Payment Administration, said cuts in provision of medical services might also force low-income people onto public assistance. "If the Medically Needy program is eliminated," she said, "people can't keep their jobs or they won't take jobs."