No Medicaid Money as New Fiscal Year Draws Near

A new fiscal year is set to begin, and at least 22 states are counting on federal Medicaid money that has yet to materialize.

A congressional proposal to approve more Medicaid funding — which was originally part of the stimulus package and is set to expire at the end of 2010, halfway through the fiscal year that begins in most states on Thursday (July 1) — ran into Republican opposition in the Senate last week. The provision was part of a larger package that included an extension of unemployment insurance for jobless Americans. Republicans argue that the programs are worthwhile, but that the government must curtail spending.

The Hill reported that Senate Democrats are still working behind the scenes to collect votes for the Medicaid and unemployment assistance, but it seems unlikely that the package will clear Congress by the time the new fiscal year starts. According the Center on Budget and Policy Priorities, at least 22 states and the District of Columbia have already passed fiscal 2011 budgets that count on the extra Medicaid funding, which totals $16 billion under the latest version of the Senate bill.

Governors of both parties have asked for more Medicaid money, and some — led by Democrats Ed Rendell of Pennsylvania and Jennifer Granholm of Michigan — have warned that layoffs and other difficult budget cuts could be a direct result of the loss of funding.

The question now is how quickly those cuts would have to be made if the Medicaid money does not arrive. Some analysts believe that cuts will begin immediately after the new fiscal year begins, and Rendell has warned of 20,000 state worker layoffs by July. But others say that states can still hold off for months while governors and others lobby Congress- lobbying that is expected to ramp up dramatically this week, as Reuters reported .