Lawmakers, others worry about stimulus funds, Medicaid money

Los Angeles Times: As federal stimulus funds begin to run out, including enhanced federal support for swelling Medicaid rolls, lawmakers and others are worried that the U.S. economy could again stall. "[M]any important programs are losing funding. Among the most crucial is unemployment insurance. … Stimulus funds have also helped subsidize health benefits through the Consolidated Omnibus Budget Reconciliation Act, or COBRA, which gives jobless workers an opportunity to continue their coverage at group rates for a limited time. Efforts to extend those provisions are stalled in Congress. The National Employment Law Project estimates that 1.63 million workers will exhaust their benefits by the end of this week, and at least 140,000 workers will lose COBRA coverage."

A higher match rate for California's Medicaid program will also end Jan. 1 without congressional action. "The state will have to find the money for Medi-Cal elsewhere, probably through $1.8 billion in further cuts, according to the governor's office. 'The human impact of requiring us to find another $1.8 billion in spending cuts to replace federal funding that was designed to help states avoid deep cuts … is both cruel and counterproductive,' Gov. Arnold Schwarzenegger wrote to the state congressional delegation earlier this month" (Semuels, 6/30).

Bloomberg Businessweek: A contingent of U.S. state governors will be in Washington Wednesday to push for an extension of the higher matching rate for states' Medicaid programs. The event "set up by Pennsylvania Governor Ed Rendell, follows the Senate's failure last week to move a bill forward that included $16 billion in extra funds for Medicaid, the state-run health-care program. The measure, which also was set to extend some jobless benefits, was blocked by Republicans opposed to its cost." The federal government approved last year using stimulus funding to give states a higher match rate for Medicaid programs to help them cope with the increasing number of people needing help because of the recession. But that money runs out at the end of this year and a proposal to extend the higher match rate six months into 2011 has been met with opposition from lawmakers concerned about deficit spending. "Republicans objected to the cost of the bill, not the assistance itself, said Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell, a Kentucky Republican. The stalled measure was projected to add $33 billion to the federal budget deficit. Stewart suggested the governors appeal to Democrats, 'who insist on adding the bill to the national debt'" (Selway and McNichol, 6/29).

The Atlanta Journal-Constitution: If the extension of the higher matching rate is not approved, states may have to make steep cuts to other programs. In Georgia, the "$17.9 billion state spending plan that takes effect this week is looking dicey even before the new fiscal year begins. That's because Gov. Sonny Perdue and lawmakers balanced the budget using nearly $400 million in extra federal Medicaid stimulus money that Congress has so far declined to approve. About 30 states, including Georgia, built that extra money into their budgets. They assumed Congress would continue providing Medicaid stimulus money that has been sent to states to help out during the recession"  (Salzer, 6/29). 

The (Raleigh, N.C.) News & Observer/Charlotte Observer: The North Carolina budget for next year already has faced massive cuts, which would be made worse by a denial of the Medicaid match extension. Already, the budget "cuts $50.7 million to in-home care for Medicaid recipients, meaning 18,000 people would lose benefits. ... And cuts could get worse in January. The budget relies on $519 million in federal Medicaid money that may not come. The budget includes a contingency plan that would raid reserve funds, cut the state's contribution to the retirement system and cut another 1 percent from state spending" (Niolet, Ferreri and Bonner, 6/30).

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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.