States Lobby Congress for Additional Medicaid Dollars

Facing a sluggish economy that threatens to add millions of people to Medicaid rolls, states are asking the federal government to increase funding for the program by "billions of dollars," the New York Times reports. Growing Medicaid costs, along with slowing tax revenues, is one of the main reasons that a majority of states face budget deficits (Hernandez, New York Times, 12/10). Thirty-five states have a combined budget shortfall of more than $25 billion for this fiscal year, according to a new survey from the National Governors' Association (NGA) and the National Association of State Budget Officers (Nasser, USA Today, 12/10). Further, the NGA predicts that if the unemployment rate continues to rise, the number of Medicaid beneficiaries -- now totaling 36 million people -- could rise another three to four million in the next six months. Such an increase would further strain state budgets; NGA analysts estimate that Medicaid on average accounts for 20% of state spending, meaning that states spend "nearly as much on Medicaid -- about $87 billion in the current fiscal year -- as on elementary and secondary education combined," the Times reports. The nation's governors are seeking "at least" $5.5 billion in additional federal Medicaid funding for the coming year. In a bipartisan letter to congressional leaders, Raymond Scheppach, NGA executive director, said, "The fiscal crisis in states is growing every day, and this change is the only federal policy that will provide relief to both the states and the millions of new Medicaid recipients we expect."

Leading the Effort
The Times reports that New York, which has "long had among the most expensive Medicaid programs of any state," is leading the push in Washington, D.C., for greater federal funding. Gov. George Pataki (R) will travel to Washington this week to urge congressional leaders to include such a provision in the economic stimulus package. "The growing state budget shortfalls in nearly every state will continue to be a major drag on economic recovery," he said in a letter to Congress, adding, "I urge that the final economic stimulus package build upon the existing federal-state partnership by including a temporary increase" in federal Medicaid funding (New York Times, 12/10). While the question of whether Congress will act to increase Medicaid funding remains up in the air, some struggling states have already begun to reduce Medicaid benefits to deal with budget shortfalls. California, for example, has delayed expanding its CHIP program to adults until 2003. Other states, including New Jersey and Ohio, have considered using their shares of the national tobacco settlement to deal with costs (USA Today, 12/10).