Another Medicaid boost ...
… but states shouldn’t plan on getting any more
State officials got a reprieve from the federal government last week after Congress cleared legislation that extends a higher share of the Medicaid matching rate. But after a lengthy battle on Capitol Hill, few expect to see any more extensions.
The enhanced payments, courtesy of a broad economic stimulus package passed in 2009 but set to expire at year-end, instead will extend through June 2011.
Starting at a rate equal to about a 6.2% bump in pay, the bonus payments will be phased out over two quarters next year, first down to 3.2% and then to 1.2%.
For cash-starved states, which had already come to depend on the federal bump, the enhanced funding could help them stave off job cuts and restrictions to care.
Ann Kohler, director of the National Association of State Medicaid Directors, warned, however, that more needs to be done. “It will fill in some of the deficits that states are facing right now,” she said. “Without it, states probably would have made some pretty draconian cuts.”
Even so, the six-month extension likely won’t be enough to backfill money that states have lost after a prolonged economic slump. “This will not fill their entire deficits,” Kohler said.
In a report released by the Kaiser Commission on Medicaid and the Uninsured, researchers found that even as the overall economy slowly begins to recover, Medicaid caseload and spending growth remain high at a time when state revenue growth remains weak.
Almost all of the states are likely to continue to see budget gaps heading into their fiscal 2011, the report adds. “It’s really critical,” Kohler said of the funding. “States are in a terrible financial bind right now.”
State governors were left in a holding pattern after passage of the legislation took decidedly longer than expected. In New York, state officials had budgeted for an additional $800 million in Medicaid dollars, but had to craft an alternative plan just in case it wouldn’t come. That would have resulted in deep payment cuts to healthcare providers and schools.
Laura Appel, vice president of federal policy and advocacy for the Michigan Health & Hospital Association, said that added money helps, but does little to improve the already slim margins that providers work under.
When the original enhanced Medicaid payments rolled in to Michigan, Appel said they were able to fund a growth in caseload and utilization—but just barely.
The state received about $1 billion in additional funds in fiscal 2010, but even so, with the sluggish economy the program was operating
Appel: “I think it’s realistic to assume that this is it for a while.”