by Alexandra Sange

When Congress passed the American Reinvestment and Recovery Act (ARRA) in late 2008, they provided a series of tools aimed at helping families, individuals, states and localities weather the crippling economic downturn.  In addition to the historic health center funding totaling $2 billion, another critical investment included in ARRA was an enhanced match rate from the federal government to each state to support and protect Medicaid programs.  As many readers know, the federal Medicaid match-rate, or FMAP (Federal Medical Assistance Percentage), varies by state. In general, however,  the federal government provides matching funding to each state to cover at least the 50% of their Medicaid costs, though often the match is considerably higher.

ARRA included an “enhanced FMAP” rate for all states and provided even more assistance to states with especially high unemployment.  This enhanced FMAP helped to stabilize state budgets and prevented states from cutting critically important Medicaid benefits, increasing cost-sharing or implementing provider cuts in the program due to extensive maintenance of effort requirements.  The enhanced FMAP cost a total of $87 billion to the federal government and is scheduled to expire December 31, 2010.  On January 1, 2011 the FMAP will go back down to the standard match rate.

State legislators, governors, Medicaid directors, and advocates nationwide have been working over the last several months to encourage Congress to pass a six-month extension of the enhanced FMAP.  States are facing estimated shortfalls totaling $140 billion nationwide in FY2011, and if the enhanced rate is not extended, many states will be forced to make further cuts to programs across the board..Tens of millions of Medicaid patients, including millions of health center patients who rely on Medicaid for their insurance coverage, may have their health coverage put at risk. Fortunately, Congress has heard the advocates and the governors and the patients, and they agree.  For several months the House and Senate have been working to extend the enhanced FMAP rate through June 30, 2011.  The House has passed a six-month extension in two different bills, and the Senate has included the extension in a Jobs Bill that is now in conference with the House (HR 4213).  Unfortunately, it’s not free…and the pay-fors are stalling the process.   The six-month extension would run the federal government an additional $25.5 billion.  Although the Senate accounted for the full cost of the investment in their Jobs Bill, some of the pay-fors were used in the health reform reconciliation package so they cannot be used again.  While the Jobs Bill conferences, the House is looking to the Senate to come up with additional sources of revenue to offset the cost of the extension and the 60-votes they’ll ultimately need to pass a bill.  House Members aren’t sitting idly by, though:  Representatives Pingree (ME), Baldwin (WI) and Green (TX) are circulating a Dear Colleague Letter around the Hill in support of passing a six-month extension quickly before states have to finalize next year’s budgets.

It’s possible, and even likely, that Congress will act on a six-month extension of the enhanced FMAP before the upcoming Memorial Day recess.  It’s anyone’s guess whether the Senate can lock down the votes to pass it, or Congress can find the funding to pay for it – so stay tuned to the blog for more updates as the debate over the FMAP extension is sure to heat up in the next few weeks.