Medicaid directors urge quick action on enhanced funding

The country's Medicaid directors are throwing their weight behind legislation to extend a temporary increase in federal funding — money on which many state legislatures are already banking. 

In a letter to Senate leaders, the American Public Human Services Association (APHSA) — and its affiliate, the National Association of State Medicaid Directors — warned that the additional funding is "critical to ensure that states are able to avoid significant reductions in services."

"This temporary assistance has been and will continue to be essential and necessary, particularly at a time when the state Medicaid programs are further being called upon to assist those individuals who have lost their jobs during the recession and the economic downturn," wrote Cari DeSantis, APHSA's interim executive director. "Due to the continued impact of joblessness across our nation, the need for Medicaid services remains high. It is crucial to ensure that States have the resources necessary to continue to provide these services and supports."

The June 17 letter is directed to Senate Majority Leader Harry Reid (D-Nev.), Minority Leader Mitch McConnell (R-Ky.) and the leaders of the Senate Finance Committee, Sens. Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa).

The directors' concerns highlight a central flaw in the funding of Medicaid: enrollment in the program tends to skyrocket during economic downturns, at precisely the time that states are least able to afford the extra costs. Medicaid is a state-federal partnership that caters to the country's lowest income folks. 

To address that flaw, the Democrats' economic stimulus bill included roughly $87 billion to help states handle the enrollment spike during the recent recession. That funding expires at the end of 2010 — halfway through the budget year of most states. Many states have already passed budgets assuming that the additional money would be forthcoming. That would leave a huge gap in those budgets if the money doesn't arrive, forcing layoffs, benefit cuts or both.

The Senate's tax extenders package includes nearly $24 billion to extend the extra funding through June of 2011, but budget hawks on both sides of the aisle have balked at the provision. Indeed, House Democrats last month dropped the Medicaid provision from their tax extenders bill after a number of party centrists objected to the new costs. 

As a sort of compromise, some Senate Republicans are eyeing an amendment sponsored by Sen. Susan Collins (R-Maine) to provide additional funding, but phased out through the first half of 2011.

But kids' healthcare advocates are raising concerns about that plan — and not just because of funding issues. The stimulus bill's Medicaid provision also came with the stipulation that states accepting the funding could not restrict Medicaid eligibility or cut benefits. It remains unclear how the phase-out mechanism would affect those requirements.