Governors Sound Off on Medicaid Budget Fix

The National Governors Association is pushing for an economic stimulus plan that would dole out more federal dollars to state Medicaid programs.

“Increasing the federal share (of money for Medicaid) means an immediate influx of …money to the states,” says Matt Salo, NGA’s chief health lobbyist, who spoke at a (11/8) briefing in Washington, D.C.

The Medicaid program is a state-federal matching program . For every state dollar put in, a certain amount of federal money flows to the states. Alabama’s Medicaid program hauls in a high share of federal dollars, at 70 out of 100 percent. Minnesota, meanwhile, has a 50-50 split between federal and state monies.

Salo says congressional action to boost the federal Medicaid match would be a quick solution for current budget woes. “It doesn’t require a lengthy buildup, approval by legislatures or the formation of a state plan,” he says.

Ohio Medicaid director Barbara Edwards agrees that increasing the federal match “would help significantly.

“Psychologically, it’s harder for state legislators to cut if it’s a cut in matching funds. You have to cut over $2 to save $1 in funding,” she says.

Ohio’s budget situation is typical of many states. Medicaid is the largest line item in the state’s $90 billion biennial budget. Percentage-wise, spending for Medicaid and the state’s children’s health insurance program (SCHIP) accounts for 23 percent of the budget

Medicaid and SCHIP budget growth was 13.4 percent for fiscal year 2002 and is projected at eight percent next year. What’s driving up the cost of Medicaid? Unexpected growth in the number of families and kids on the rolls, and increases in nursing home costs and prescription drugs.

Edwards say Ohio has been hit by a “double whammy,” with a dramatic drop in revenue and an economy in which more people are unemployed and without health insurance. “If these trends continue, we are in deep trouble,” she says.