Extenders bill in limbo, placing COBRA subsidy and Medicaid enhanced funding in even deeper jeopardy

Efforts to renew the COBRA subsidy extension to help workers who have been recently laid off afford to keep their former employer's health insurance remains in limbo as lawmakers work at a measured pace to extend unemployment benefits and a tax package.

The Hill reports that "[n]ot only did centrist House Democrats reject the cost to extend COBRA subsidies in May, but the Congressional Budget Office last week scored the Senate's trimmed down version at $4.1 billion — far higher than supporters had expected." Those trying to reinsert the subsidy into a package of jobless benefits, called an "extenders" package, are faced with an uphill battle to find other spending offsets to pay for the subsidy extension. "The COBRA subsidy program was launched in February 2009 as part of the Democrats' economic stimulus bill. Under the program, workers laid off by their employers pay just 35 percent of their monthly COBRA premiums, with the government reimbursing the insurance provider for the remaining 65 percent with a tax credit. The original law allowed a maximum of nine months of benefits, though Congress expanded that window to 15 months last November. More than 2 million households are estimated to have participated." The National Employment Law Project says that because the subsidy expired on June 1, more than 144,000 families each month will not get the benefit (Lillis, 6/20).

The Atlanta Journal-Constitution: Although the so-called Medicare payment "Doc Fix" was taken out of the package and passed by the Senate Friday, other work on the extenders remains. "It's not clear if taking the Doc Fix out of that plan will mean an easier road ahead for the tax extenders/jobless benefits bill, or if it might actually get tougher. … Since Mid-February, other than work on health care and Wall Street Reform, this issue of jobless benefits, tax extenders and other related items has been on the floor almost every week that the Senate has been in session. And Senators are no closer to a long term deal on these issues than they were back when the first big snow hit Washington, D.C. in early February" (Dupree, 6/21).

CongressDaily: "Still lingering in the Senate with the rest of the extenders package is $24 billion in additional federal Medicaid funding for states. It is unclear if the extenders legislation will be on the Senate floor next week, but time is tight for states that budgeted for the extra funding, as many state fiscal years begin in July" (Cohn and McCarthy, 6/21).

States are beginning to worry more that the federal government's cutback on spending will hurt their bottom lines, especially when it comes to the Medicaid funding. The Arizona Republic reports: "Many still expect that the Medicaid money will materialize, if only because many states have expected the help for months and built it into budgets that begin in July. In Arizona, the federal money would mean an extra $394 million to help defray the medical costs of about 310,000 poor adults. … Because of federal mandates attached to the health-care reforms, Arizona lawmakers passed a fiscal 2011 budget that extends Medicaid-funded programs that had previously been slated for closure. The state planned to pay for the programs using the anticipated larger Medicaid matching funds from the feds." Arizona, like other states, paid less of the share for its Medicaid expenses under the spending, first authorized using stimulus funds (Hansen, 6/21).

In Michigan, a $514 million budget gap could be worsened if the Medicaid money isn't inserted back into the extenders bill. Also in jeopardy without the money in that state: Medicaid prescription drug coverage, payments to Medicaid providers and mental health services. Crain's Detroit Business reports: "Michigan isn't alone in its budgeting — around 30 states are counting on the money for their budgets, and some have fiscal years that begin July 1. … In health care, the [Federal Medical Assistance Percentage] issue comes at a time when providers say the state's Medicaid program is under multiple pressures: Michigan's Medicaid population is now at 1.8 million, as people previously insured by commercial carriers migrate to Medicaid; physician participation in the program is declining; and Medicaid patients coming to hospital emergency rooms are showing higher levels of sickness" (Lane, 6/20).

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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.