Medicaid funds may not come through

By Jamey Dunn

As many states, including Illinois, are poised to begin their new fiscal years tomorrow, governors are urging the U.S. Congress to approve billions in Medicaid funds that are already built into the states' budgets.

The American Recovery and Reinvestment Act temporarily raised federal matching funds on some Medicaid services from 50 cents on the dollar to 62. This increase is set to expire on December 31. A plan to extend the rate for six more months has passed both the U.S. House and Senate in different bills and has President Barack Obama’s backing.

However, the newest version of the plan was rolled into the embattled unemployment benefits extension bill, which may not pass before Congress takes a break from July 4 to July 14.

Illinois’ budget plan counted on that extension happening. Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Florida, Oregon, Hawaii, Idaho, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Washington, and Washington, D.C., were planning on getting the extension as well.

“I think we were right to assume the extension. But now that extension is in peril,”
said Pennsylvania Gov. Ed Rendell. His state would lose about $850 million in federal Medicaid funds if the bill is not passed.

Instead of presenting his budget cuts today, as reported Monday, Illinois Gov. Pat Quinn joined 10 other governors from across the country to call on Congress to extend the higher reimbursement rate by six months.

All the governors involved said they have made historic cuts to their budgets, and ending the higher rate would force them to cut into basic essential services such as education. “We have cut so much in so many areas, we would have to look at things we have never put on the table,” Michigan Gov. Jennifer Granholm, whose state will be out more than $500 million. She said if she cut all prescription drug assistance and long-term care facility funding in Michigan, it would only fill about half the potential hole.

New York Gov. David Paterson, who has already vetoed funding to programs he introduced when he was a state legislator, has threatened to veto education spending and legislative member initiatives if the extension doesn’t pass and legislators fail to address what would be about a $1 billion void in New York’s budget.

“It has broken our hearts to make these cuts. … Now, when we have reached the margin of our means, we ask for some assistance,” he said.

Quinn said the $750 million that Illinois was counting on for the next fiscal year could mean the difference between having a job and unemployment for some Illinoisans. “Our providers, many of them will be forced to shut down and lay off workers,” he said.

He said it was imprudent of Congress to cut back on funding during a time when more people need help covering their medical costs.

California Gov. Arnold Schwarzenegger, whose state would get about $1.8 billion from the proposed extension, agreed. He said it is wrong for Congress to mandate coverage levels but refuse to give states more funding when a recession makes demand go up.
“The federal government cannot have it both ways. … It’s simply unfair and will have devastating consequences.”

Medical providers may find it unfair as well. In order to get the elevated match, states had to operate on a 30-day payment cycle. States such as Illinois, which is months behind on payments to schools and social service providers, might not keep the providers at the top of the priority list without this incentive.

In the end, all of these states, because of shortfalls, planned their budgets around a substantial revenue source that had no guarantees of coming through. Now, they may have to rush to solve the problem. Some plan to call special legislative sessions in the next few weeks. Some governors, such as Paterson, will use components of the budget to try and cajole legislators into facing the issues.

Quinn’s Office of Management and Budget has yet to return inquiries about how Illinois will handle the possibility of about $7o0 million missing from the budget. It appears Quinn still hasn’t accepted the idea that $4 billion in borrowing he proposed to make the required pension payment may not become a reality. This new development could give him more reason to call the legislature back for a special session.

Quinn is scheduled to present his plan tomorrow morning for the lump-sum budget passed by the General Assembly. Tomorrow is the first day of the new fiscal year, and Illinois is heading into it billions short on funds but with no lack of uncertainty.