Governors warn of "double-dip" recession without Medicaid help

Rendell was in Washington along with Govs. Jennifer Granholm (D-Mich.), Christine Gregoire (D-Wash.), Martin O'Malley (D-Md.), David Paterson (D-N.Y.) and Mark Parkinson (D-Kan.) to take their message straight to lawmakers. Four others — Bill Ritter (D-Col.), Jodi Rell (R-Conn.), Pat Quinn (D-Ill.) and Arnold Schwarzenegger (R-Calif.) — participated in the press conference by videoconference. Rendell said he was also authorized to speak on behalf of Republican governors Sonny Perdue (Ga.), Janice Brewer (Ariz.) and Chris Christie (N.J.).

Rendell said if lawmakers don't act within the next two weeks, states — most of whose budget years start July 1 — will have to start making more cuts to education, social services and other programs. Many states have already made the deepest cuts in their history since the recession began.

The pending round of cuts, amounting to about $1 billion for New York and $1.8 billion for California, would force states to lay off tens of thousands of employees — including as many as 300,000 teachers nationwide — just as job creation is starting to pick up.

"We are in a very fragile recovery right now," Gregoire said. States are in "desperate need of assistance," without which the nation could suffer a double-dip recession.

Rell added that many governors feel the federal government has made things worse by imposing maintenance of effort requirements on their Medicaid programs that prohibit cutbacks in Medicaid eligibility.

Granholm said one way that states could save money on Medicaid would be to cut reimbursement rates, but that steep cuts could cause providers to abandon the system, and Medicaid beneficiaries might lose access to care. 

"For all of us, provider rates are one of the solutions," she said. "I don't know how you get around that."