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Sebelius To Governors: Extra Medicaid Money Comes With A String Attached

In this political climate, if you want help, you have to ask for it.

Health and Human Services Secretary Kathleen Sebelius this week sent a letter to all of America’s governors telling them that if they want to continue receiving the enhanced Medicaid funds that Congress approved last week that they have to ask for the money.

The funds, which upped the federal contribution toward the cost of Medicaid, were first authorized using stimulus dollars. The higher matching rate was originally slated to expire at the end of 2010, but lawmakers interrupted their August recess to approve an extension of enhanced funds, albeit at a lower rate, through June 2011. While states got an increase of 6.2 percent in the federal match for their Medicaid programs using the stimulus dollars, they will see only a 3.2 percent match increase in the beginning of 2011 before it drops to 1.2 percent in April and eventually ends in June.

Before the stimulus, the federal government’s share of Medicaid costs was between 50 and 76 percent (depending on the per capita income of the state). The federal match increased to between 61 and 84 percent of all Medicaid spending with the first stimulus spending.

By telling governors they have until Sept. 24 to ask for the funds, Sebelius is forcing the hands of these officials, particularly those Republicans who have been vocal about their distaste for additional deficit spending. Initially, many governors, Republicans and Democrats alike, urged Congress to approve the extension of the enhanced match, but some Republican governors, such as Minnesota’s Tim Pawlenty, roundly criticized the funding. Others, such as Mitch Daniels of Indiana, and Haley Barbour of Mississippi, initially signed a letter with 40 state executives asking for this Medicaid assistance, but later changed their position. That’s not to say they won’t take the money: A Daniels spokesman told the Fort Wayne Journal Gazette that the governor will cash any check the federal government sends Indiana. Barbour, however, says he doesn’t want the money, The Hill reported.

In her August 16 communication, Sebelius says, “This new federal funding can stave off the deep cuts to Medicaid that many had feared, and sustain jobs in hospitals, health centers and communities across the country. As a former governor and current partner with states in running Medicaid, I urge you to act.”

Here is the text of the letter:


The Secretary of Health And Human Services
Washington, D.C. 20201

August 16, 2010

Dear Governor:

Last week, President Obama signed into law the Education Jobs and Medicaid Assistance Act, which will provide states and territories with an estimated $16.1 billion to support their Medicaid programs. This new federal funding can stave off the deep cuts to Medicaid that many had feared, and sustain jobs in hospitals, health centers, and communities across the country. They will also support Title IV-E foster care programs. These funds are only available for your state if you request them within 45 days of enactment, or by September 24, 2010. As a former governor and current partner with states in running Medicaid, I urge you to act.

The new law provides states the option of extending additional Medicaid funding through an increase in the Federal Medical Assistance Percentage (FMAP). The FMAP increase was initially authorized by the American Recovery and Reinvestment Act (Recovery Act) and is set to expire this December. Under the new law, states that request these funds will receive a 3.2 percentage point increase in their FMAP from January to March 2011, and a ½ percentage point increase from April to June 2011. Additional FMAP increases are available for each calendar quarter during this period for states with high unemployment rates. The Recovery Act policy on FMAP for the U.S. territories is also extended for this time period. The original requirements to receive the Recovery Act increased FMAP continue to apply to receiving the funds during the extension period.

The assistance is essential for states as they support health care services for their residents, and for state budgets more broadly. By reducing the need for budget cuts and layoffs in health, education, public safety, and other vital state services, the additional federal Medicaid assistance will support a variety of public and private economic activities. Analysis by the Council of Economic Advisers of the first few months of the FMAP increase contained in the Recovery Act showed that states that received more dollars had smaller employment losses during the worst of the downturn. In total, the Council of Economic Advisers estimates that the FMAP increase in the Recovery Act will protect or save more than 750,000 jobs.

This FMAP extension also complements the support provided to states and territories through the Affordable Care Act. In the few months since this law was enacted, the Administration has offered nearly a quarter of a billion dollars in grant funding opportunities to states to support activities to make health care more affordable, accessible, and high-quality. This includes grants to enhance current activities for reviewing health insurance premium increases; to educate consumers about their health coverage options; to explore and potentially establish Health Insurance Exchanges – new marketplaces where people can shop for health insurance; and to strengthen state and local public health systems.

There is no question this is a tough time for states, and governors are being asked to do more with less. I encourage you to take advantage of extended Medicaid support available to you through the Education Jobs and Medical Assistance Act. Details on the certification to access these funds will be available at This new law, along with the Affordable Care Act, will help support jobs and build a health care system with lower costs, more choices and higher-quality health care for all Americans.


Kathleen Sebelius


Sebelius Medicaid Money Letter To Governors

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