By Robert Kidney, Assistant Director of State Affairs, NACHC

$16.1 billion in extended FMAP funding was signed into law by President Obama last week, providing much needed fiscal relief to states. Approximately 30 states had already assumed the originally proposed $24 billion in extended FMAP funds in their SFY2011 budgets, and would have faced even larger budget gaps, if Congress failed to act. While the 6-month extension may not completely make up every last penny, it’s a relief for these states to have the federal dollars to help fill those gaps although some additional budget cutting measures may be necessary. The additional federal aid also provides a cushion to those 20 states that didn’t assume that FMAP would come through which could help them fill gaps or stave off cuts.

According to a recent update on state budget cuts by the Center on Budget and Policy Priorities (CBPP), 31 states have made cuts to health programs and services as a result of continuing state fiscal crises.  These cuts could negatively impact access to health services for health center patients and health centers’ bottom lines.  The FMAP extension should help states avoid further cuts, and possibly even restore cuts made.

Health centers are not immune from direct state funding cuts either.  Preliminary findings of a recent NACHC survey of primary care associations indicate that 22 states have decreased funding to health centers for SFY2011 and in at least three states (MA, MI, PA), critical health center funding was contingent on the availability of the enhanced FMAP extension.  Since the vast majority of state legislatures have adjourned for the year, restoring already-enacted budget cuts may require a special session of the legislature or separate legislation once lawmakers reconvene next year.  This could leave health centers in many states in the lurch, unsure of the fate of critical state funding.  Another challenge for advocates will be the fact that November’s election may result in the turnover of a large number of governors and state legislators who may be averse to re-opening the state’s budget to increase spending during tough economic times.

While there are still many unknowns, one thing is certain—the much-needed extension of enhanced FMAP will likely prevent even deeper cuts to Medicaid and other critical health programs and services than might otherwise have been made.