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Coalition Urges Medicaid Hike, But Finance Panel May Be Wary

By John Reichard, CQ HealthBeat Editor

January 25, 2008 -- Senate Finance Committee members who met Friday morning to lay out the options for an economic stimulus package discussed the possibility of temporarily boosting federal Medicaid spending to help jump-start the economy, but there were no immediate signs they would push hard for such a provision at a markup next week.

Committee Chairman Max Baucus, D-Mont., was mum after the meeting about Medicaid or any other specific provisions that might go into the Senate version of the stimulus package, saying only that he sees an opportunity to build on the agreement announced Thursday by House leaders and the Bush administration.

Meanwhile, advocates of the increase are pinning their hopes on the Senate version of the package. Labor, provider, and patient advocacy groups scrambled to join state governors in urging the Senate to add Medicaid increases, sending a letter to congressional leaders Thursday signed by 87 organizations saying that in the last recession, Medicaid cuts "caused one million families and children to be cut off or denied Medicaid."

"Local government revenues are plummeting in many areas, due to falling property tax revenues that reflect the decline in home values," said the letter signed by the AFL-CIO, the American Federation of State, County, and Municipal Employees, the American Hospital Association, the Children's Defense Fund, the American Health Care Association, and the National Conference of State Legislatures, among other groups. "To avert slashing fire, police, and education in response to falling property tax revenues, many local governments are now beseeching their states to help fill that gap. But that puts even greater pressure at the state level on programs like SCHIP [the State Children's Health Insurance Program] and Medicaid."

The National Governors Association (NGA) said this week that temporarily increasing the percentage the federal government pays of Medicaid costs—the "federal medical assistance percentage" (FMAP)—is a top priority for governors on a bipartisan basis in the economic stimulus package. The NGA said in a statement Wednesday that "the nation's governors strongly support a combination of a $6 billion block grant and $6 billion in increased Medicaid funding to be included in any stimulus package enacted into law during the economic downturn of 2008.

"As a condition of receiving the enhanced FMAP, states should be barred from reducing Medicaid eligibility as was the case in 2003" when states received fiscal relief, the coalition letter said. "Fiscal assistance to states and localities, as a growing number of states confront budget deficits, constitutes an effective stimulus, shoring up budgets while preserving essential services for millions of low- and middle-income families."

Oregon Republican Senator Gordon H. Smith said that Finance Committee members who attended the meeting Friday morning—about half of the panel's members attended—had "a good discussion" about a temporary increase in federal Medicaid spending. "I think there's general support for it, but an unwillingness to scuttle the package over it," Smith said.

"At this point, it's one of the items on the table," said Debbie Stabenow, D-Mich. "There have been no decisions."

"One of the issues that was raised was where the White House would be," Stabenow said. "The extent to which the president would support it obviously becomes key if we're going to get it done." President Bush agreed to a temporary increase in FMAP rates in 2003 legislation that included major tax cuts, but Medicaid provisions are not a part of the agreement announced Thursday negotiated by the administration and House leaders.

"We're not going to comment on every idea that's floating out there," said White House Spokesman Tony Fratto when asked about the administration's reaction to including Medicaid provisions. "But I think we've made it very clear that we got to a very good bipartisan agreement with the House." He added that the Senate "runs the risk of getting bogged down" and of upending the deal if it begins considering a wide variety of provisions.

Medicaid is competing with extending unemployment insurance and improving food stamp benefits among the provisions the Senate might try to add to the stimulus package. The latter two provisions may be higher priorities on the Finance panel. Unemployment insurance "is very important" to Michigan, Stabenow said.

Unemployment insurance and food stamp provisions also were discussed at the meeting, Smith said. "I think there's an openness to it, again with the idea to not jeopardize this bipartisan opportunity to actually do something to be helpful," he said. "And so it's a balancing act that we'll have next week, and so we'll have a markup next Wednesday or Thursday."

House Speaker Nancy Pelosi, D-Calif., suggested Thursday that Medicaid and unemployment insurance might be handled in follow-up legislation, and lobbyists are speculating about the possibility of a second stimulus package later this year. But New Hampshire Republican Sen. John E. Sununu, a newcomer to the Finance panel, said "my sense from the discussions is that we'll have a good opportunity to get a bipartisan package here, to get something signed into law in the next couple of weeks. But any subsequent package in May or June or July of of this year is going to run into presidential politics, and I think realistically that means we'll have one opportunity to put together an economic growth package."

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