Medicaid funding extension moving through Congress

States would get six more months of federal stimulus money. Additional funds have been slated to help states reduce mandatory payments for Medicare drug coverage.

By Doug Trapp — Posted March 24, 2010

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The tax extenders bill that the Senate approved on March 10 included a much-anticipated six-month extension of stimulus Medicaid funding in addition to the latest Medicare physician pay patch. The move sent the package back to the House for approval.

The Senate measure would extend through June 2011 the enhanced federal Medicaid funding enabled by the most recent federal stimulus bill. That law required states to maintain existing eligibility and enrollment standards in exchange for receiving $87 billion in additional Medicaid funding over 27 months.

But this enhanced Medicaid funding is set to expire at the end of 2010, despite continued economy-driven increases in Medicaid enrollment. States are facing a combined $180 billion in budget deficits for fiscal year 2011, which begins on July 1 for most states, according to a March 8 report by the Center on Budget and Policy Priorities, a liberal think tank.

The House adopted a six-month Medicaid funding extension on Dec. 19, 2009, as part of a separate jobs bill, but both chambers must adopt one measure with the same language. The House was expected to consider the tax bill with the Medicaid funding extension, but the timing of consideration was initially unclear, according to a Democratic Senate aide. President Obama supports the six-month extension, which would cost about $25 billion.

Senate Majority Leader Harry Reid (D, Nev.) and Sen. Jay Rockefeller (D, W.Va.) were among the more vocal advocates for the additional federal support. "This Medicaid extension is a strong example of how our country is going to protect jobs and families alike," Rockefeller said in a March 2 statement. He is chair of the Senate Finance Committee's subcommittee on health.

Other additional federal help is already on the way. Health and Human Services Secretary Kathleen Sebelius announced on Feb. 18 that the Obama administration is using $4.3 billion in leftover stimulus funds to reduce state payments to the federal government. States are obligated to help offset the cost of providing Medicare prescription drug coverage to people eligible for both Medicare and Medicaid. The relief reduces states' obligations to $13.2 billion for the 27-month period ending on Dec. 31.

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