Governors Push for $5.5B Medicaid Boost in 2002

With budget shortfalls in 36 states totaling $35 billion, governors are pushing the White House and Capitol Hill to provide a $5.5 billion relief package to boost federal Medicaid payments as part of the "deadlocked" fiscal stimulus bill, the Washington Post reports. According to Ray Scheppach, executive director of the National Governors Association, states are spending about $100 billion each year on Medicaid and more than 25% of their general budgets on health care. While deficits in state budgets continue to grow, due in part to changes since the Sept. 11 attacks on the World Trade Center and the Pentagon, state spending on Medicaid has increased at a rate of 11% each year. Governors say that the $5.5 billion relief package would provide a "direct stimulus to the economy" because all the funds would be spent next year. The governors' plan would boost Medicaid reimbursements in every state by 1.5%, and those with "above average unemployment" would receive an additional 1.5%. The Post reports that such a proposal was included as part of the original, failed Senate Democrat stimulus bill, but as negotiations have progressed, the proposal has been combined with a plan to extended Medicaid eligibility to the recently unemployed. The governors, however, are opposed to such an expansion of coverage. Michigan Gov. John Engler (R), also the NGA chair, said, "There is strong bipartisan opposition to that among the governors. We're going broke on Medicaid now" (Broder, Washington Post, 12/18). 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 million to four million in the next six months. Such an increase would further strain state budgets.

Republican Election Prospects
Last week, Gov. George Pataki (R) urged congressional leaders to include the governors' 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 (Kaiser Daily Health Policy Report, 12/10). The Bush administration, however, has "questioned" the proposed relief package, saying it would "set a precedent" for higher Medicaid payments in the future. According to Engler, the White House would not agree to the plan without "substantial concessions" from Democrats on other issues. However, a spokesperson for the Office of Management and Budget said the administration is "looking at all the options." Despite the White House "fears," Engler said he thinks "there is a deal to be done" that would include the extra funding in the stimulus package (Washington Post, 12/18).