Wedged in the House health-care bill is $23.5 billion that looksa lot more like new federal stimulus spending than anything to dowith national health-care reform.
The barely debated pot of money would allow Congress to continuepumping billions in new short-term aid to states to cover Medicaidcosts that have increased with rising unemployment in the past year.
The potential impact of the new spending became clear last weekwhen giddy state budget officials in capitals from Annapolis toSacramento penciled in the revenue, hoping that if health-carelegislation survives in the Senate, the states' bonus might squeakthrough.
Medicaid relief for states comprised one of the biggest pieces ofFebruary's $787 billion federal stimulus package, but that fundingwill run out next year, halfway through states' next round ofspending plans.
Under the Affordable Health Care for America Act, the federalgovernment would continue to pay a higher share of all Medicaidcosts -- 66 percent on average, up from 57 percent before thestimulus -- for an additional six months, and erase in one fellswoop a major chunk of states' projected shortfalls for the comingyear.
'It would be a huge help -- critical,' said Cindi Jones, chiefdeputy director of Virginia's Medicaid program, which quicklyestimated last week that it would receive an extra $360 million to$380 million next year under the bill. At a meeting last week of thenation's Medicaid directors, Jones said the group is unanimously infavor of the provision.
Said Steve Ford, the department's director of policy andresearch: 'We don't get bogged down in the terminology of what it is-- [more stimulus] or not. We've viewed it as our federal increase. . . which obviously helps the state.'
House Republicans, who had repeatedly blasted the cost of thebill, never directly attacked the additional state funding in thefinal floor debate leading up to the Nov. 7 vote, even as theycharged in other contexts in recent weeks that Democrats were tryingto increase federal spending without introducing a second stimuluspackage.
Only one Republican, Rep. Don Young (Alaska), issued a statementbefore the vote condemning the $23.5 billion, saying the fundingwould only delay the inevitable. In six months, he said, statesagain would not have enough to cover their Medicaid costs.
Chris Whatley, Washington director for the nonpartisan Council ofState Governments, said he sees an explicit political motive on thepart of those backing the House bill. 'It would force states toabsorb huge new Medicaid cost loads, and they want states to lookpast their immediate crisis and believe it's going to be okay. It'sa sugarcoating to help them swallow a very bitter pill.'
Two House Democrats who spoke on the condition of anonymity sothat they could freely discuss the provision in closed-doornegotiations, said the measure was designed to be a pragmaticsolution to the reality that states do not have the capacity to dealwith a reversion to regular Medicaid rates. Without another boost infunding to prop them up until their tax revenue rebounds, stateswould have to severely restrict access to Medicaid and otherservices for the poor or would have to cut programs, which couldnecessitate the layoffs of thousands of public employees and furtherdepress the economy.
The two said the provision, which was added to the bill lastmonth, also was part of a more complex set of final tradeoffs tocontrol the cost of the House measure after the chamber's Democraticleadership settled on a goal of extending Medicaid coverage toeveryone making up to 150 percent of the poverty rate.
The $23.5 billion in new short-term aid, they said, would partlyoffset other provisions that would require states to begin paying atiny fraction of the costs of new Medicaid enrollees in 2015, a yearearlier than in previous versions of the legislation. The finalHouse bill also would increase, to 9 percent, states' permanentshare of the costs for new enrollees.
'Call it stimulus if you want,' one of the Democrats said, 'butit's a recognition that it's a dire situation for states that haveto run a balanced budget.'
John Holahan, a Medicaid expert at the Urban Institute, said thatif it had not come up in the course of health-care legislation, itprobably was only a matter of time before Congress would have had toaddress the end of Medicaid stimulus funding.
'When we got into 2010, there was going to be a lot of talk abouta need for more stimulus. I guess maybe to avoid that they put it inhere,' Holahan said. 'It was going to come up somehow, we're goingto be looking at high unemployment and swollen Medicaid rolls beyond2010,' he said.
The provision, Section 1749 of the House measure, would extendthrough June 2011 an across-the-board 6.2 percent increase infederal Medicaid matching money, as well as additional percentage-point benefits that most states now qualify for because of highunemployment rates.
In Maryland, the measure would mean $384 million next year in newfunding, or enough to cover about 20 percent of the state'sprojected $1.9 billion shortfall.
Robin Rudowitz, a principal policy analyst for the KaiserCommission on Medicaid and the Uninsured, said it is unclear whetherthe six-month fix would be enough. 'Most states are not anticipatingtheir revenue to be back up to levels seen before the recession fora few more years,' she said. States may still be faced with'previously unthinkable Medicaid cuts when the funding ends.'
Raymond C. Scheppach, executive director of the NationalGovernors Association, said that even if the $23.5 billion survivesas part of the health-care overhaul, the six-month extension of thestimulus spending would still end too abruptly. 'It's sort of like acliff,' he said. States 'get the funding for two more quarters, butwe would prefer that it ratchet down over a couple more. The cliffis just moved back.'
davisa@washpost.com
