States Face Budget Scramble As Chances For Federal Medicaid Assistance Extension Get Slim

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.

States are lobbying the Senate to put back a provision back into the jobs bill that provided funds for enhanced federal Medicaid payments that would last through the end of the year, CQ reports. "'States are still in fiscal peril,' Scott Pattison, executive director of National Association of State Budget Officers (NASBO), said during a conference call June 3. He said governors face a 'cliff' when the extra $87 billion provided for Medicaid in the 2009 stimulus package runs out Dec. 31." The governors association is asking for lawmakers to restore the enhanced funding - at a cost of $23 billion - through next June, after it was stripped out of a jobs bill last week. "Under the health care overhaul law, states can no longer increase premiums or otherwise change eligibility criteria for Medicaid. That means their options for cutting costs are limited to things like reducing provider reimbursements, increasing co-payments or dropping coverage for optical and dental services" (Ethridge, 6/3).

Meanwhile, news reports indicate that states also are bracing for the budgetary impact if Congress doesn't extend this federal Medicaid assistance.

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" (Simon and Halper, 6/3).

The Washington Post: "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. ... [B]ut 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 Associated Press/Las Vegas Sun: The loss of the funding, which was stripped out of the jobs bill, 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). 

The Associated Press/Arizona Capitol Times: "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).