Lawmakers Called To Approve Economic Stimulus Package Including Medicaid Funds

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Three governors at a House Appropriations Committee hearing on Thursday asked Congress to consider passing a two-year stimulus bill of between $600 billion and $1 trillion, including additional Medicaid and infrastructure funding, CQ Today reports (Clarke, CQ Today, 12/11).

New Jersey Gov. Jon Corzine (D) suggested that the package include up to $100 billion in state aid to help alleviate operating costs, in addition to a recent request for $40 billion over two years to help fund state Medicaid programs (Taylor, AP/Chicago Tribune, 12/11). Vermont Gov. Jim Douglas said states need an increase in federal contributions to their Medicaid programs because declining revenue in recent years has hurt state budgets (Kelly, Burlington Free Press, 12/12).

Declining revenues have caused budget shortfalls in many states, the AP/Tribune reports (AP/Chicago Tribune, 12/11). Committee Chair David Obey (D-Wis.) said, "We can anticipate more large reductions in real revenues coming into the states and coming into the federal government," adding that "falling revenues will force those states to cut important services or to raise taxes" (Sanchez, CongressDaily, 12/11). Wisconsin Gov. Jim Doyle (D) on Thursday said, "We will be forced to cut the very tools and services that people depend on to pull them out of recession." Corzine said that there are parts of New Jersey's budget that cannot absorb cuts, adding, "What's left on the chopping block are fundamental programs like Medicaid, higher education and aid to municipalities."

According to the AP/Chicago Tribune, President-elect Barack Obama's transition team and Democratic congressional leaders have begun work on an economic stimulus package of about $500 billion, which could be signed shortly after the inauguration (AP/Chicago Tribune, 12/11). Obama has said that, among other things, the infrastructure funding should be used to make electronic health records more available to hospitals and physicians (CQ Today, 12/11).

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State Budget Cuts Affect Health Coverage

In related news, more than one million people could lose their health coverage and many more could have their health benefits reduced because of enacted and proposed state budget cuts to Medicaid and SCHIP programs, according to a Families USA report published on Thursday, Reuters reports (Fox, Reuters, 12/11). According to the report, mounting budget deficits in 19 states already have caused actual or proposed cuts to Medicaid or SCHIP programs for fiscal years 2009 or 2010. Three more states have put planned Medicaid or SCHIP expansions on hold (Skotzko, CQ HealthBeat, 12/11).

Families USA found that states are cutting Medicaid and SCHIP by reducing eligibility, cutting benefits, raising out-of-pocket costs or lowering payments to providers (Reuters, 12/11). According to the report, the most common action states are taking is lowering payments to providers. Fourteen states already have implemented such reductions and six states are considering them (CQ HealthBeat, 12/11).

Ron Pollack, executive director of Families USA, said, "Medicaid is one of the largest -- and in some states the largest -- state expenditure. It means that the health care safety net is very much at risk when state budgets are strained" (Hunt, CongressDaily, 12/11). According to the report, every dollar a state cuts from its Medicaid or SCHIP program saves the state between 17 cents and 50 cents in state funding while costing between 50 cents and 83 cents in federal matching funds (Reuters, 12/11).

The report calls for increased federal funds for Medicaid and the reauthorization of SCHIP, which expires in March 2009. "It is our hope frankly that they deal with [SCHIP] in the context of the stimulus package," Pollack said. Senate Finance Committee Chair Max Baucus (D-Mont.) recently said that he planned to include a short-term extension of SCHIP in an economic stimulus package but hoped that it would be part of a greater health care reform effort (CongressDaily, 12/11).

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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