Congress OKs more Medicaid funds for states

The measure, approved after the House speaker called members back from their August recess, also gives education a $10 billion boost.

By Doug Trapp — Posted Aug. 16, 2010

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Congress in early August unexpectedly approved $16.1 billion in additional Medicaid funding to help states stabilize their fiscal situations, but only after Democrats made reductions elsewhere in the budget to offset the spending.

House Speaker Nancy Pelosi (D, Calif.) took the unusual step of calling House members back from their August break to approve the package on Aug. 10. The House voted 247-161 to approve the measure, which includes $10 billion in additional education funding. The Senate had approved the package 61-39 on Aug. 5 after the House recessed for the month.

President Obama signed the package into law the same day the House approved it.

Rep. Joe Barton (R, Texas), the highest ranking GOP member of the House Energy and Commerce Committee, said Medicaid is not facing a financial catastrophe. "In the short term this is not something that absolutely has to be done."

But Frank Pallone (D, N.J.), chair of the House Energy and Commerce health subcommittee, said the legislation should have had more bipartisan support because it will prevent state health care and education cuts. "Many Republican governors have asked for it."

The unexpected Democratic victory followed weeks of attempts to approve the six-month Medicaid funding extension and other assistance for states and laid-off workers. The House and Senate attempted to provide $24 billion more in Medicaid stimulus funding in late May, but Democrats scaled back the aid to $16 billion after they fell short of votes. States will receive the money between January and June 2011, the final six months of fiscal 2011 for most states.

Republicans and some conservative Democrats in both chambers objected to previous versions of the legislation because new spending would not have been paid for fully with new revenues or cuts. However, Sens. Olympia Snowe (R, Maine) and Susan Collins (R, Maine) joined Democrats to surpass the 60-vote threshold needed to end debate on the fully offset bill and proceed to a final vote.

"Senate Republicans' tactics of delay, obstruction and political posturing will no longer deny states and communities the aid they need to create jobs and provide vital services to the American people," Pelosi said on Aug. 5.

Approval of the $16.1 billion in Medicaid funding happened as states still struggle to recover from the recession, partly due to continued high unemployment, according to an analysis released Aug. 4 by the National Conference of State Legislatures. State budget deficits could surpass $100 billion in fiscal 2012 despite the deep cuts states already have adopted, the NCSL estimated in July.

Pennsylvania Gov. Ed Rendell, who led governors' lobbying efforts for the additional federal Medicaid dollars, said Congress' approval of the funding is a "tremendous relief." But because of the scaled-back package, Pennsylvania will receive only $600 million of the $850 million in additional Medicaid funding originally expected.

About 30 states adopted fiscal 2011 budgets that anticipated the original $24 billion stimulus Medicaid extension, according to NCSL. Some states went on to cut programs or were considering cuts to replace the Medicaid dollars when it became clear they might not materialize. For example, Massachusetts Gov. Deval Patrick used line-item vetoes to trim $458 million from the state's fiscal 2011 budget. The state had been expecting $372 million in additional Medicaid funding before the debate bogged down.

"There was a lot of budget-cutting taking place that will no longer be necessary," said Senate Majority Leader Harry Reid (D, Nev.).

States have erased 242,000 jobs since August 2008, but the stimulus package's state fiscal stabilization fund has saved an additional 312,000 jobs, mostly in education, according to the Dept. of Education.

Sen. Minority Leader Mitch McConnell (R, Ky.), however, said the supposedly temporary stimulus package spending is turning into continuous assistance. "Once again, Democrats are showering money on their favored constituencies and asking the American people to pay for it."

Some advocates for the poor were disappointed that Senate Democrats paid for the Medicaid spending in part by cutting $11.9 billion in stimulus money for food stamps.

This is the first time that federal food stamp benefits will be reduced, said Jen Adach, spokeswoman for the nonprofit Food Research and Action Center, which combats hunger. About 40.8 million families received food stamps in May, an increase of 6.4 million from May 2009. Democratic leaders pledged to try to reinstate the food stamp funding later this year.

Food stamp benefits also would be cut under a Senate-adopted reauthorization of federal child nutrition programs, also approved on Aug. 5. That measure heads to the House next.

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More help for states

Congress in August approved more than $26 billion in aid to cash-strapped states that are struggling to maintain Medicaid programs and avoid teacher layoffs. The legislative package:

  • Includes $16.1 billion in enhanced federal Medicaid funding. It increases the federal share of Medicaid spending by 3.2 percentage points from January through March 2011 and by 1.2 percentage points from April through June 2011.
  • Includes $10 billion for state pay to teachers, with requirements for states to maintain certain levels of education spending.
  • Is paid for in part by ending $11.9 billion in stimulus food stamp increases and revising Medicaid drug pricing by $2 billion.

Source: Congressional Budget Office, Joint Committee on Taxation

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