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Democrats Consider Temporary Increase In Medicaid Federal Matching Funds

Armen Hareyan's picture

Democratic plans to includean increase in the percentage of matching funds states receive for Medicaid aspart of an economic stimulus package might meet "resistance fromRepublicans, although they might be willing to allow the provision in exchangefor some of their priorities," CongressDaily reports (Johnson,CongressDaily, 1/17). Increasing the federal medical assistancepercentage would help states maintain Medicaid eligibility levels at a timewhen more people are likely to become uninsured because of job loss and applyfor Medicaid benefits, according to David Parrella, chair of the National Association of State Medicaid Directors and director of the ConnecticutMedicaid program (Reichard, CQ HealthBeat, 1/16).

The increase would be worth several billion dollars and would provide animmediate boost to states, although funds would be limited to use on Medicaid,according to aides. The provision is being based on language included in thelast economic stimulus package, under which states received a 1.5% increase infederal matching funds for six fiscal quarters (Johnson, CongressDaily,1/16). Lawmakers crafting the economic stimulus package are willing to spend asmuch as $100 billion to try to "counter a recession that they worry mayalready have begun," according to the Washington Post (Weisman/Birnbaum, WashingtonPost, 1/17).

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Republican Response,Prospects

HHS Secretary Mike Leavitt on Wednesday said heopposed an increase in the federal medical assistance percentage for Medicaid,noting that it could serve as a way to increase federal control over healthcare, which the White House opposes. Leavitt said, "I don't think thatMedicare and Medicaid were intended as jobs programs," adding, "Theywere intended to help those with serious economic disadvantages" (Andrews/Herszenhorn,New York Times, 1/17).

A House Republican aide said, "Increasing Medicaid payments is a great wayto expand entitlement spending but would do little or nothing to actuallyimprove the economy for working Americans," adding, "It is just asimple cash transfer to states, with no connection to the areas of greatestneed or any requirements that the money actually be spent in ways that helpimprove the economy" (CQ HealthBeat, 1/16).

However, according to CongressDaily, the money for Medicaid reports.Republican aides on Wednesday said that the presence of the federal medicalassistance percentage increases would not necessarily indicate that the WhiteHouse will veto the package as long as they were part of an economic stimuluspackage that included tax cuts, according to , alongwith increased funding for food stamps, is "certain to be included"in the economic stimulus package (Cohn, CongressDaily, 1/17). Aproposed increase "would surely meet with Republican objections, althoughnot necessarily fatal ones," CQ HealthBeatCQ HealthBeat (CQHealthBeat, 1/16). House leadership plans to meet on Tuesday withPresident Bush to discuss ideas for the stimulus package (Geewax, Atlanta Journal-Constitution, 1/17).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.