Governors to bring Medicaid fight to Washington

By Lisa Lambert

WASHINGTON, June 25 (BestGrowthStock) – Desperate U.S. states are
preparing to bring the fight for financial help to the U.S.
Congress as early as Monday after the Senate rejected their
pleas for assistance in paying for Medicaid.

Late on Thursday, a bill that would have sent billions of
dollars to states to help them cover the costs of Medicaid, the
healthcare program for the poor, failed in the U.S. Senate.

By Friday morning, governors were planning to come to the
nation’s capital to tell lawmakers that without the money, they
will have to slash already lean budgets for fiscal 2011, which
for most states begins in a week.

“For Michigan and for states across the country this is
devastating,” said Michigan Governor Jennifer Granholm, a
Democrat, in a conference call with reporters.

She noted that 30 states, including some with Republican
governors, have assumed the increased Medicaid funding in their
fiscal 2011 budgets. For a map of how much money states would
have received under the extension, please see
http://link.reuters.com/gyw24m

Soon, governors will “in person start giving the message
that this will be disastrous for the recovery,” said
Pennsylvania Governor Edward Rendell, a Democrat. A group of
governors is trying to schedule a press conference in
Washington on Monday, he said.

“I am still pretty optimistic that we will get our message
heard and this will be passed in a jobs bill or, at the latest,
the President will include it in his budget, which goes into
effect October 1,” Rendell said.

With the recession that began in 2007 continuing to grind
on state revenue, most will lay off thousands of workers to
balance their budgets.

Unlike the U.S. government, states cannot run deficits.
They have already cut spending and there is little appetite to
raise taxes, according to National Governors Association
Executive Director Raymond Scheppach.

Rendell said that without the Medicaid money, his state
will lay off upward of 20,000 workers in July. He is still
negotiating Pennsylvania’s budget with the state legislature.

Last year’s economic stimulus plan increased federal
payments to states for Medicaid by 6.2 percent through
December, with extra money going to those with especially high
unemployment. States had asked for a six-month extension of the
aid, at a cost of about $24 billion. The Senate bill continued
the aid through June 2011, but gradually lowered the increase
to 1.2 percent.

On average Medicaid, which is administered by the states
with partial reimbursements from the federal government, takes
up 20 percent of state budgets. That proportion swells during
recessions as job lay-offs push more people to seek
government-subsidized healthcare, just as state tax revenue to
pay for the program drops off.

For Michigan, where the fiscal year begins Oct. 1, the
absence of enhanced Medicaid funding will put a new hole of
more than $500 million in the budget, according to Granholm.

New York will lose out on $2 billion, according to the
state’s governor, David Paterson, a Democrat.

“While I understand and support the desire to restrain and
pay for federal spending, cutting funding for mandatory safety
net programs during the worst economic downturn since the Great
Depression will have devastating consequences,” he said in a
statement.

Investment Tools
(Additional reporting by Karen Pierog in Chicago; Editing by
Dan Grebler)

Governors to bring Medicaid fight to Washington