States still hoping for extra Medicaid money but also developing contingency plans

Kaiser Health News reports that states and hospital groups continue to lobby for a six-month extension of enhanced Medicaid money despite funding concerns and the lack of a way forward for such an extension. "With states facing a recession double-whammy of less revenue and more demand for health care services, Congress included extra money to Medicaid programs in the February 2009 federal stimulus package." The increased money for the state-federal health program for the poor, called the Federal Medical Assistance Percentage, is slated to run out at the end of 2010. But state leaders from 29 states had built into their budgetes an additional six months of the money to help them afford the swelling Medicaid rolls because "officials were convinced the money was imminent." However, concerns over the cost of the extension have many lawmakers hesitant to add to the federal deficit.

"Ann Kohler, director of health services for the American Public Human Services Association and head of the National Association of State Medicaid Directors, said she hasn't heard of any imminent legislative action [on the proposal]. 'I am worried that it may not be passed,' Kohler said in an e-mail. 'Or [that] it will not pass until after the election and states would have already begun to make cuts'" (Villegas, 7/23).

In the meantime, states like Michigan are preparing to make cuts to budgets or find other ways of helping pay for their Medicaid responsibilities.

The Detroit News: "Michigan likely will lose at least $260 million in Medicaid funding in the coming year, and possibly as much as $560 million, Gov. Jennifer Granholm said Thursday. Such a loss threatens mental health care, prescriptions and other Medicaid services that Michigan now provides but that are 'optional' under the federal Medicaid program, Granholm said." Granholm added that hopes have dimmed for the extension and that state leaders will unveil Thursday a contingency plan for the program which will include an increase in revenue. It's unclear what form the increase in revenue will take, but Republicans control the state Senate and have "vowed not to increase taxes to help balance the budget" (Bouffard, 7/23).

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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.