States face budget scramble as chances for federal Medicaid assistance extension get slim

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Jun 4 2010

States are worrying that enhanced federal payments to help cover Medicaid expenses during the recession will soon end after the House opted not to include an extension of the funds in its recent jobs bill.

State House News Service/The Boston Globe: "Reliance by the [Gov. Deval] Patrick administration and the Democrats who control the House and Senate on nearly $700 million in additional health care funding has become a riskier proposition. Congress is balking at extending the funds, potentially creating a gap in the state's fiscal 2011 budget just as lawmakers begin to work out differences in their proposals." Without the extra money, deeper spending cuts on some health care programs will be likely. "States have been pushing Congress to find another vehicle for the funding, and US House Speaker Nancy Pelosi sounded a note of optimism Tuesday that the House would tackle the Medicaid and unemployed health benefits spending after it returns from recess next week" (O'Sullivan, 6/3).

Los Angeles Times: "The potential loss of funds is a significant setback for Gov. Arnold Schwarzenegger and state lawmakers, who may not see nearly $2 billion in federal assistance that they intended to use to help bring California out of the red. The money was to be California's share of $24 billion in proposed assistance, mostly to cover healthcare spending, spread among all states. … In California, the governor has already proposed eliminating the state's welfare program, canceling state-subsidized day care for hundreds of thousands of low-income children, freezing school spending and making a number of other deep cuts to close a $19.1-billion budget gap. Failure to get the federal money would surely force more drastic proposals" (Simon and Halper, 6/3).

The Washington Post: Virginia legislators are worried that the cuts could have major impacts on constituents and budgets. "Virginia, like 20-plus other states, adopted a budget that included some drastic cuts to health and human resources, but said that the cuts probably would not go into effect because Congress was on the verge of approving a bill to extend enhanced Medicaid funding for states. ... They had hoped to reach a compromise by Memorial Day, but that has not happened. The federal stimulus bill included boosted Medicaid spending for states lasting until Dec. 31. States have sought an extension of the increased aid for another six months to June 30, 2011." Without the funding, some say the cuts could mean thousands fewer children could get health coverage under a state program (Kumar, 5/31).

The (Washington, D.C.) Examiner: Officials in Virginia and Maryland "expect to have about $800 million less to plug sagging budgets after the House of Representatives stripped the provision — which would have extended by six months the stimulus package's enhanced Medicaid payments — out of a spending bill. The Senate has yet to consider the measure" (Flook, 6/3).

The Associated Press/Las Vegas Sun: Nevada legislators in the meantime might be forced into another special session if the Medicaid funding is not restored. The loss of the funding, which was attached to a jobs bill and later stripped out, could cost Nevada $88 million. "Gov. Jim Gibbons and state lawmakers included that funding in the budget it passed during February's special session. … Cutting the funding would reduce the federal Medicaid match from nearly 64 percent to just 50 percent, leaving the state to pay for the other half" (6/2).

Arizona's share would be $400 million, and Arizona Gov. Jan Brewer's budget director said the likelihood of it being brought back up and passing "appears to be dropping," The Associated Press/Arizona Capitol Times reports. "The money would maintain Medicaid eligibility for 310,000 people, about a quarter of the Arizona Health Care Cost Containment System's enrollment. As one part of her proposal to eliminate the state's big budget deficit, Brewer in January proposed reducing eligibility effective Jan. 1. The state budget that was approved in March authorized the cutoff." But lawmakers later "authorized the state to keep the eligibility through mid-2011 if funding is available" (Davenport, 6/1).

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.