States struggle as Congress fails to come through with extra Medicaid money

Congress' rejection - at least for now - of a package extending $16 billion in Medicaid funding and $35.5 billion in other jobless benefits has left at least 30 states struggling to balance next fiscal year's budgets with tax increases, spending cuts and layoffs, The Associated Press reports. The new fiscal year begins in just days for most states. One example: "California faces a whopping $19 billion deficit — more than 20 percent of the state's total budget — despite deep cuts that have already been made to many programs. Its new fiscal year begins July 1, and a budget deal there is nowhere in sight." States had anticipated that the federal support would be extended through June 2011 (Fouhy, 6/28). 

CNNMoney: "Young children in Massachusetts will lose state-funded mental health services. Welfare recipients will see their employment and training programs slashed. And homeless families will lose nearly all their state assistance to move into more permanent housing." The state will need to cut $700 million from its new budget through programs such as these. "The Bay State had assumed Congress would pass $24 billion in additional Medicaid funding for states before their fiscal years start on July 1" (Luhby, 28). 

Some state governments appear to be holding out hope, the Salem, Ore., Statesman Journal reports. Gov. Ted Kulongoski has moved ahead on spending cuts to close a $577 million shortfall. But, "[a]ides said Kulongoski does support the effort by many states to obtain more money for Medicaid." Senate Majority Leader Harry Reid, D-Nev., said Congress would make another attempt to pass legislation extending the relief, which is set to expire in December, after its July 4 holiday recess (Wong, 6/29).

Gov. Pat Quinn of Illinois is also preparing to make $300 million budget cuts, the Springfield, Ill., State Journal-Register reports. "The state's budget problems are further aggravated by Congress' failure to approve a new stimulus bill, which would have included money to help states with Medicaid expenses. Illinois was counting on about $750 million from the program" (Finke, 6/29).

The Associated Press/Lexington Herald-Leader: Kentucky "Gov. Steve Beshear warned Monday that more than 8,000 Kentuckians will stop receiving jobless benefits unless Congress resolves an impasse that is holding up an additional round of federal funding to financially strapped states. Kentucky lawmakers had counted on additional federal funds to help pay for the rising cost of jobless aid and the Medicaid program when they crafted a two-year budget earlier this year" (Alford, 6/28).

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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.