Medicaid Funding Should Be Included In Economic Stimulus Bill

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House Energy and Commerce Committee Health Subcommittee Democrats on Thursday during a hearing expressed support for additional federal Medicaid funds for states as part of an economic stimulus package, CongressDaily reports. The House might consider a stimulus package next week in a lame-duck session. According to subcommittee Chair Frank Pallone (D-N.J.), any stimulus package that the House considers next week will include an increase in the Federal Medical Assistance Percentage, "but it won't be very large." He said that such a stimulus package might include an additional $14 billion in federal Medicaid funds for states over 18 months (Edney, CongressDaily, 11/13).

During the hearing, Gene Sperling, a top economic adviser in the Clinton administration, Arizona Gov. Janet Napolitano (D) and other governors asked the lawmakers to increase federal Medicaid funds for states by $40 billion to $50 billion over two years. The National Governors Association on Thursday released a paper that recommended an increase of $20 billion annually over two years.

However, Raymond Pinard, a print business owner who testified on behalf of the U.S. Chamber of Commerce, during the hearing said that the "best way to protect health care benefits and reduce health care costs incurred by states is to provide incentives for the private sector to create jobs." Alan Viard, a resident scholar at the American Enterprise Institute, said that any stimulus package should not include "increases in the federal Medicaid matching rate ... because they are an ineffective means of boosting aggregate demand" (Reichard, CQ HealthBeat, 11/13).

NIH Funds

House Energy and Commerce Committee Chair John Dingell (D-Mich.), who did not attend the hearing, on Thursday in a statement recommended that any stimulus package include additional funds for NIH. In a statement, Dingell said, "The federal dollars that NIH sends out into communities provide direct economic benefits at the local level, including increased employment and growth opportunities for universities, medical centers, and local companies" (Goldstein, "Health Blog," Wall Street Journal, 11/13). During the hearing, Families USA Executive Director Ron Pollack, acting NIH Director Raynard Kington and GlycoMimetics CEO Rachel King expressed support for increased funds for NIH (CQ HealthBeat, 11/13).

House Speaker Nancy Pelosi (D-Calif.) has expressed support for additional federal Medicaid funds for states as part of a stimulus package, but "there's been little talk of adding NIH to the list," according to the Wall Street Journal's "Health Blog" (Goldstein, "Health Blog," Wall Street Journal, 11/13). Pallone said that he does not expect any stimulus package that the House considers next week to include additional funds for NIH but added that a package considered next year is more likely to include such funds (Edney, CongressDaily, 11/13).

State Budget Deficits

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In related news, a number of governors and mayors have called on Congress to pass a stimulus package next week that includes additional federal Medicaid funds for states, as many states face large budget deficits and increased Medicaid enrollment as a result of the current economic downturn, the Christian Science Monitor reports.

"If Congress does not act soon on a fiscal stimulus package, states are warning of plans to lay off librarians, cut health care services, and ask unions to forgo raises," according to the Monitor. According to Iris Lav, deputy director of the Center on Budget and Policy Priorities, 41 states have faced or face budget deficits, and total deficits could reach $100 billion, or 13% to 14% of state budgets, by 2010.

Michael Bird, federal affairs counsel of the National Conference of State Legislatures, said, "We're not asking for a stimulus package because it will fill budget gaps," adding, "We think it will provide additional benefits for those most disadvantaged by the downturn and create economic activity through the infrastructure package" (Scherer, Christian Science Monitor, 11/14).

Assistance for Automakers

Meanwhile, congressional Democrats on Thursday said that they likely will not have adequate support to pass legislation next week that would use funds from the recently enacted $700 billion bailout to assist the auto industry, the New York Times reports (Herszenhorn, New York Times, 11/14). Senate Banking Committee Chair Chris Dodd (D-Conn.) said that an inadequate number of congressional Republicans support such legislation (Swindell, CongressDaily, 11/13).

Executives from United Auto Workers, General Motors, Chrysler and Ford last week in a meeting with Pelosi, Senate Majority Leader Harry Reid (D-Nev.) and other congressional leaders asked for $25 billion in additional federal loans for health care payments for retirees. The loans would help cover the contributions from the companies to a voluntary employees' beneficiary association for UAW retirees. Executives for the companies also asked for $25 billion in loans to maintain operations (Kaiser Daily Health Policy Report, 11/12).

In the event that congressional Democrats cannot pass legislation to provide assistance to the auto industry, the administration of President-elect Barack Obama has the authority to use funds from the bailout to assist the industry, Dodd said (Swindell, CongressDaily, 11/13). However, "some industry experts fear that one of the Big Three automakers will collapse before then, with potentially devastating consequences" (New York Times, 11/14). Sen. Debbie Stabenow (D-Mich.) said, "We're in a situation where there's a great unknown about what will happen," and "(there's) a great concern that at least one of the companies will find themselves in a situation where they cannot make it until Jan. 20," when Obama takes office (Grier, Christian Science Monitor, 11/14).

Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/email . The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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