Colorado Faces Further Grim Cuts if Medicaid Funding Isn’t Extended (CO)

June 10, 2010

If Congress chooses not to approve a six-month extension of Medicaid help to the states, Colorado could face a $211 million budget hole and the prospect of another cut to K-12 education or other programs.

Medicaid, a state and federally funded program that provides health care for the poor, now covers about 500,000 Coloradans. During the recession, the federal government has increased its share of Medicaid funding to the states, which have seen tax revenues plunge as Medicaid enrollment rose.

It was expected that the federal help would continue — and seemed such a sure thing in the spring that Colorado and at least 29 other states included the federal money in their budgets for the 2010-11 fiscal year even before it was approved by Congress.

The American Recovery and Reinvestment Act already included the enhanced Medicaid match for states through December.

The U.S. House in November passed a further six-month extension for the beginning of 2011 in a version of the federal health care reform bill, while the U.S. Senate passed the extension in another bill. President Barack Obama had pledged support for extending the funding.

"Looking at where it was in the process in D.C., we felt comfortable budgeting to it, and so did the legislature," said Todd Saliman, Gov. Bill Ritter’s budget director.

State Rep. Mark Ferrandino, D-Denver, agreed.

"Not such a done deal"

&a mp;quot;We were pretty confident with both chambers passing it and the president saying he supported it, that it was a done deal," said Ferrandino, a member of the legislature’s Joint Budget Committee, "and now it’s not such a done deal."

That’s because some House Democrats are now uneasy in an election year about approving more deficit spending.

U.S. Rep. Diana DeGette, D-Colo., chief deputy whip in the House, supports the extension but said, "A number of our (Democratic) members are balking at any spending that’s not paid for."

The Medicaid funding extension has been inserted into a bill that awaits a full Senate vote. DeGette said that if the bill receives 60 votes in the Senate, it could encourage conservative Democrats in the House to vote for it.

U.S. Reps. John Salazar and Betsy Markey of Colorado, both part of a pack of conservative "Blue Dog" Democrats in Congress, support the extension, but both also urged fellow members of Congress to look for ways to pay for the spending, according to their offices.

In the meantime, states are fiercely lobbying Congress to approve the extension. In a letter to Colorado’s congressional delegation Wednesday, Ritter urged swift passage.

"In a time of crisis, when one in 10 Coloradans depends on Medicaid for basic medical coverage, the neediest in our state simply cannot bear the brunt of these funding cuts," Ritter said in the letter.

State programs in peril

"If Colorado chooses to spread these cuts beyond Medicaid, already-suffering state programs will face worsening conditions. Public schools, higher-education institutions and grants to local governments will all likely face deeper service cuts. Lacking an exten sion, I will soon take steps to cut spending even more than we already have, putting programs that we all care deeply about in jeopardy."

State officials said it would be difficult to cut Medicaid spending itself to balance the budget because doing so likely would violate rules under the new health care reform law. Such cuts also could run afoul of a 2009 state law that imposed a fee on hospitals to help pay for expanded Medicaid eligibility and which will draw up to $600 million in federal matching money.

The governor’s office said it has the authority to make the cuts to programs before the current pot of enhanced Medicaid money runs out in December. The legislature also could try to quickly address the situation in January, when it reconvenes.

But Colorado’s budget process leaves few areas available for cutting, and education always has to be scrutinized when the state needs savings.

Republicans said the uncertainty over the funding extensions validates GOP warnings about federal spending propping up the state budget.

"We told them not to count on this money," said state Sen. Greg Brophy, R-Wray. "We’ve been telling them for two sessions to stop planning on spending borrowed money from the federal government because someday it’s going to bite us."

Still, 15 of 23 Republican governors signed a letter with 26 Democratic governors sent to congressional leaders earlier this year urging an extension of the Medicaid funding.