Extenders defeat leaves state Medicaid help in limbo

Democrats' failure Thursday evening to advance tax extenders legislation leaves the future of billions of dollars in federal Medicaid funds in doubt.

The money would help states pay for their Medicaid expenses for the first two quarters of 2011, preventing deep cuts to services that would otherwise be needed to balance their budgets.

The Senate could yet attempt to tack the provision onto another bill, but it's not clear lawmakers will have time to act before the July — or even August — recess. Another question: Now that Senate Democrats have acquiesced to a scaled-down Medicaid provision to woo centrist Republicans such as Sen. Susan Collins (Maine), will they be able to go back to the full 6.2 percent increase in federal payments that was originally on the table?

Lawmakers expressed a mix of opinions and emotions after the 57-41 vote. 

Sen. Jay Rockefeller (D-W.Va.), one of Congress' staunchest Medicaid advocates, said he was ready to go home and "sob."

"I don't think it passes," he said of the Medicaid provision's future chances. "So it's just a sad, devastating thing for so many states."

Sen. Tom Harkin (D-Iowa), by contrast, said "hope springs eternal."

"I think it's overdue right now," Harkin said. "The sooner the better."

Other Democrats offered differing views on what shape the provision should take in the future.

Sen. Ron Wyden (D-Ore.) expressed his continued support for extending through June the 6.2 percent increase in the Federal Medical Assistance Percentages (FMAP) established in last year's recovery act.

"It'll be tough," he said, "but we'll keep trying."

The original FMAP provision would have cost about $24 billion. A subsequent version of the tax extenders bill negotiated with centrist Republicans reduced it to a phased-down FMAP increase of 5.2 percent for the first quarter of 2011 and 3.2 percent for the second quarter. The version defeated Thursday had increases of 3.2 percent and 1.2 percent (cost: $16.1 billion).

Sen. Ben Nelson (D-Neb.) — the only Democrat to vote against the tax extenders passage Thursday — said the bigger priority for him was that the provision be paid for. Senate Republicans have said the same thing.

Lawmakers have discussed tacking pieces of the extenders bill — including FMAP — onto other bills. One possibility: the jobs bills that Senate Majority Leader Harry Reid (D-Nev.) on Thursday said could be brought up before the weekend.

Asked about that possibility, Senate Finance Committee Chair Max Baucus (D-Mont.) said: "We'll decide later."