Dems latest extenders bill further scales back Medicaid funds

Senate Democratic leaders last night released their newest version of a sweeping tax bill that's been stuck in the upper chamber for weeks. 

Designed to entice the support of budget hawks, the proposal scales back the $24 billion in state Medicaid funding by roughly $8 billion -- savings derived by phasing out the enhanced federal share over the first half of 2011. For the first three months of 2011, the federal government would pay an additional 3.2 percent of Medicaid costs beyond its traditional share. In the second quarter, the enhanced rate would drop to 1.2 percent.

The Democrats' had hoped to extend a 6.2 percent increase through next June -- a rate established as part of their 2009 economic stimulus bill. Senate centrists, however, have objected to the costs. 

A number of states have budgeted for the 6.2 percent increase to see them through to next summer. Anything less will force layoffs, benefit cuts, or both, they've warned.