Federal Government Should Provide Funds For SCHIP, Medicaid

Ruzanna Harutyunyan's picture

In response to the recent economic downturn, states are looking to the federal government for help to address rising enrollment and budget shortfalls for Medicaid and SCHIP programs, hoping to avoid reducing benefits or cutting beneficiaries from the programs, Stateline.org reports.

State officials are asking for temporary increases in the federal matching rate for Medicaid, which costs the states and federal government a combined $330 billion annually. They also are requesting reauthorization and expansion of SCHIP, two expansions of which were passed by Congress in 2007 but later vetoed by President Bush.

Many state officials have said that a stimulus is necessary to improve Medicaid and SCHIP because the programs are tied to the economy. Stateline.org cites a study from the Kaiser Family Foundation's Commission on Medicaid and the Uninsured estimating that a 1% increase in unemployment leads to 1.1 million more uninsured people and one million more beneficiaries enrolled in the programs. According to a report released Tuesday by Families USA, 8.6 million children, or one in nine, did not have health coverage in 2007, a figure tallied before the economic downturn.

The Georgetown University Center for Children and Families estimates that 4.1 million people have lost employer-based health coverage over the past 12 months, many of whom must turn to Medicaid and SCHIP for aid. The programs, however, are "on the brink of deteriorating," according to Jocelyn Guyer, deputy executive director of the center. She added, "The question is, are we going to step up and inject money into those programs so they can work during the downturn, or are we going to let them deteriorate?"


Sen. Max Baucus (D-Mont.) proposed in a recent health care reform white paper that increases in FMAP happen automatically during recessions. Previously, the federal government supplied an additional $10 billion in Medicaid funds in 2003. The House has proposed providing $14.4 billion and the Senate set the figure at $19.6 billion for the current downturn.

Stateline.org reports that states might have a better chance of receiving more federal aid for the programs from President-elect Barack Obama, whose proposed health care plan calls for expanding both programs and includes a requirement that all children be covered.

NGA Involvement

The National Governors Association in October sent a letter to congressional leaders saying that $20 billion annually for two years for Medicaid would help states to "continue services for those with the greatest need" (Vu, Stateline.org, 11/26). In related news, Obama on this week is scheduled to meet with 40 governors and governors-elect in Philadelphia to discuss various challenges -- including money for Medicaid programs -- facing states across the nation and whether federal aid for these challenges can be included in a stimulus proposal that Obama wants to sign upon taking office in January 2009, the Philadelphia Inquirer reports. The meeting will be hosted by Pennsylvania Gov. Ed Rendell (D), chair of NGA, and Vermont Gov. Jim Douglas , co-chair of NGA (Fitzgerald, Philadelphia Inquirer, 11/26).

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.