US States to Lose $1.08 of Every Medicaid Dollar

NEW YORK - The end of the federal stimulus program will mean that U.S. states on average will lose a total of $1.08 for every state dollar spent on Medicaid by July 1, according to a study released on Monday.

"They (states) will revert back to the same funding levels they had before the recession," Debra Miller, director of health policy for The Council of State Governments, said in the report.

The drop in federal funding for Medicaid, which provides health care for the impoverished, elderly and disabled, could hit states hard because many of them are struggling with big deficits and rising demand for social services from people who have lost their jobs.

"Revenues have yet to rebound significantly in the states and most of them are still facing much higher Medicaid enrollment numbers than normal as residents continue to struggle with high unemployment rates," Miller said.

The states and federal government split the cost of Medicaid, and Congress had approved extra matching dollars in its program to kick-start the economy. The matching rates differ around the nation but on average states got $2.68 for each state dollar in late 2010, up from $1.61 in 2008.

On April 1, the average state will lose 21 cents in federal funding for every dollar it spends, after losing 37 cents of each federal dollar on January 1, according to the report by the Lexington, Kentucky-based Council of State Governments.

Several governors have proposed slashing funding for Medicaid to help erase budget gaps. New York Governor Andrew Cuomo, for example, wants to cut $2.3 billion from the health plan, which costs the state $1 billion a week.

Before the April and July deadlines, states will likely try to maximize matching dollars by filing as many claims as possible with the federal government, Miller said.

Medicaid is the nation's biggest public health plan -- it covered 49 million people in 2009 -- and all manner of health organizations, from hospitals to nursing homes rely on this program. "Medicaid funds support thousands of health-related jobs and facilities, as well as medical education and work force development programs," the report said.

Twenty states will have a lower match rate from the federal government than before the recession in the 2008 fiscal year.

They range from Rhode Island, which will collect two cents less for each dollar it spends, to North Dakota, which will suffer a 52-cent reduction.

But 17 states will get higher matching rates. This range runs from Idaho, which gains four cents for each state dollar it spends, to Michigan, whose match rises by 57 cents. The rates will stay the same for 13 states and the District of Columbia, the report said.

For more details, see the report: http://knowledgecenter.csg.org/drupal/content/states-face-medicaid-match-loss-after-recovery-act-expires