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Governors Officially Mum on Size of Medicaid Spending Request

By John Reichard, CQ HealthBeat Editor

DECEMBER 1, 2008 -- On the day before a scheduled meeting in Philadelphia between President-elect Barack Obama and the nation's governors, state officials stopped short Monday of specifying how much added federal Medicaid spending should be included in a massive new economic stimulus package to be taken up by the 111th Congress, other than to say it should exceed the sum states received in 2003 tax legislation.

The 2003 measure (PL 108–27) provided a total of $20 billion in aid to the states in 2003 and 2004 on the heels of the last economic downturn—$10 billion in added federal Medicaid spending and $10 billion for a general relief fund for government services. Medicaid money in the upcoming package should be "north of that," Gov. Jim Douglas, R-Vt., told a press conference Monday.

The remarks by state officials followed their meeting earlier in the day with House Speaker Nancy Pelosi, D-Calif., and House Education and Labor Committee Chairman George Miller, D-Calif., to discuss stimulus legislation.

The governors released a paper Nov. 13 saying that Congress should boost outlays through the "Federal Medical Assistance Percentage" (FMAP)—the percentage of Medicaid funding paid by the federal government—by a least $20 billion a year for two years. Gov. Janet Napolitano, D-Ariz., said at a House hearing the same day that the "FMAP" increase should total $25 billion a year over a two-year period.

NGA officials said after Monday's briefing that the two-year figure of $40 billion in the association's Nov. 13 paper fell short of the status of an official NGA policy position. "We're not going in with a unified ask," NGA Executive Director Raymond Scheppach said of Tuesday's meeting with Obama. Scheppach added that governors are trying to link the size of their FMAP request to the budget shortfalls they are expecting in the current downturn. The sum they are looking for is 20 to 30 percent of projected state budget shortfalls, Scheppach said.

How big those shortfalls will be is unclear, as is the size of the economic stimulus package Obama and congressional leaders will agree to seek. Gov. Edward G. Rendell, D-Pa., told Monday's briefing that estimated shortfalls range between $140 billion and $200 billion over the next two years. Rendell is chairman of the National Governors Association and Douglas the vice chairman.

Governors aren't looking to the federal government to make up the entire amount of their budget shortfalls. "We understand that we have to do this ourselves," Rendell said. Douglas noted that Vermont has cut its overall appropriations by two percent and is now looking at added cuts of three percent. "States are not just coming to Washington with our hands out," he said.

In addition to added money from Medicaid, food stamps, and unemployment insurance, states are looking for up to $136 billion in funding for infrastructure improvements, 70 percent of which would be applied to transportation-related outlays including improvements in bridges and roads, Rendell said. The funds also would include spending on school construction and promoting the development of renewable energy sources. "There are tons of jobs to be created in green energy," he asserted.

It's unclear how much added FMAP money congressional leaders will seek, but Senate Majority Leader Harry Reid, D-Nev., made a pitch for stimulus legislation in late November that included $37.8 billion in added Medicaid money. Douglas said Monday that he's "optimistic" Obama will support a large temporary increase in federal Medicaid spending and Rendell noted that as a senator Obama favored the inclusion of FMAP money as part of aid to the states to stimulate the economy. Rendell said that the aim is to have an economic stimulus package ready for Obama to sign when he takes office Jan. 20.

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