Federal Medicaid Assistance to States Falls $1.74 Billion Short
24 States Left with Holes in Medicaid Budgets
LEXINGTON, Ky.—Twenty-four states were betting on receiving additional federal funds to relieve state Medicaid budgets hard-hit in this recession. But, those federal funds—also known as the Federal Medicaid Assistance Percentages, or FMAP—fell $1.74 billion short of what those states hoped for, leaving gaping holes in state budgets, according to groundbreaking research by The Council of State Governments.
Those 24 states, plus California where a budget is still pending, assumed the federal government would extend the 2009 Recovery Act's increased Medicaid dollars to the states in their 2011 fiscal year budgets. Although Congress voted to provide $14.15 billion in Medicaid funds to the states, it wasn't enough for some states' budgets.
"Medicaid can be the bane of state budgets. The policy wonks say Medicaid is a counter-cyclical program. But that knowledge is small comfort to those in charge of balancing budgets, who watch Medicaid rolls expand as people lose jobs at the same time state revenues shrink as tax receipts decline," said Debra Miller, director of health policy at CSG.
States are now grappling with the discrepancy and how to plug holes.
The real winners are the states that did not budget the additional funds. Because those states--including California with its budget in limbo--now have an additional estimated $7.3 billion in federal funds; they can either move state general funds they had allocated for Medicaid to other spending areas, or use these state funds to pull down even more federal Medicaid money.
While the additional federal funding will certainly help cash-strapped states in the short term, current enrollment trends and increasing health care costs mean that Medicaid spending will continue to strain state budgets. Nearly all states are finding enrollment is growing faster than expected due to the slow economic recovery, so it is likely many states will face deficits in their Medicaid budgets by the end of the 2011 fiscal year.
"The federal match for Medicaid may be a good deal for states--but states still have to come up with their share," Miller said. "In today's lean times, that is difficult and the states that counted on a larger match are digging into other state programs, including K-12 and higher education."
The additional funding ranges from $22 million in North Dakota and $23 million in Wyoming and South Dakota at the low end to $851 million in Texas, $1.41 billion in New York and $1.88 billion in California at the high end.
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