Senate substitute amendment phases out state Medicaid funding

Additional federal funding for state Medicaid programs would slowly phase out next year, according to the latest version of the Democrats' substitute tax extenders bill floating around Tuesday.

Under an $87 billion provision of the 2009 economic stimulus bill, states received at least a 6.2 percent increase in the federal share of Medicaid funding, but that extra help expires at the end of 2010. Senate Democrats have pushed to extend that assistance through June of 2011 in order to help states shore up their budgets during a lean economy.

But budget hawks opposed the proposal, which was estimated to cost nearly $24 billion.

Instead, Democrats are now proposing to provide a 5.3 percent increase in federal Medicaid funds in the first quarter of 2011, and a 3.2 percent increase in the second quarter of 2011.