Medicaid Money: Feds Shouldn’t Pull Rug on Funding Now (PA)
June 9, 2010
When Gov. Ed Rendell crafted his budget proposal for the coming fiscal year, he expected additional federal Medicaid dollars would come through for Pennsylvania.
At the moment that funding, which would add another $850 million to the state’s projected deficit, is in jeopardy. Twenty-nine other states are in a similar boat.
Congress needs to make passing the funding a priority.
For 10 months, the Medicaid money has been included in bills passed by each chamber, and states believed it was assured. Only recently was it stripped out of a measure.
At this stage in the state budget process, the funding loss would cause huge problems. Gov. Rendell has said the elimination of monies — a six-month extension of increased federal funding on Medicaid — would mean layoffs of at least 20,000 state workers.
“It would actually kill everything the stimulus has done,” Rendell said to a New York Times reporter. “It would be enormously destructive.”
The federal stimulus dollars for Medicaid were supposed to run out in December of this year, but the president and supporters in Congress said it would be extended to June 2011. It makes sense given that most states’ budgets run on a fiscal year from July to June.
Many governors echo Rendell, saying that losing the extended funding will cause financial havoc and job losses. Considering that new federal figures show that since 2008, states, local governments and school districts have cut 231,000 jobs, punching another big hole in state budgets would further slow the economic recovery.
In Pennsylvania, cuts would likely occur in drug and alcohol programs, domestic violence and rape crisis centers and reduced reimbursements for hospitals, nursing homes and care for the disabled, according to advocates.
Our congressional delegation members need to do what they can to make sure the Medicaid funding passes.
But there also is a downside to this money as our next governor will learn soon after he takes office. The federal stimulus money will disappear next year.
This will leave Pennsylvania figuring out how to fill the void in future budgets. It will mean developing increased state funding or potentially cutting some of the same programs that were saved by stimulus dollars.
The stimulus money has provided a necessary infusion of funding at a time when states are battling difficult economies. They have rightly used it for road work, other transportation needs and finding ways to create jobs.

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But it also has been spent on government programs such as Medicaid and education, which leaves a looming question for next year: How will that money be made up?
This has been the negative of the stimulus funding. It has paid for program increases, in some cases, that then leave officials struggling when the money’s gone. It reminds us of the grants allowing communities to hire more police officers. Once the grants run out, local governments are forced to figure out how to use tax dollars to retain the officers’ jobs.
There is no disagreement that we must curb our debts and deficits, but the short-term extension of the stimulus Medicaid funding — projected to cost $24 billion nationally — is necessary. Without it, there could be further unemployment and an erosion of important health programs for the state’s most needy.