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Nov 2008
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Stimulus Package
Potential Second Economic Stimulus Package Could Include Money for State Medicaid Programs
The growing severity of the states’ fiscal crisis is gaining more attention in Washington, especially amidst discussions about the need for another stimulus package. In October, Deputy Director Iris Lav, of the Center on Budget Policy Priorities, testified before the House Budget Committee on the magnitude of state deficits, noting that far more states have or are projecting deficits than was the case just a few months ago.
Senate Majority Leader Harry Reid
“As you'll see from the testimony, we now project total state deficits for FY 2010 of about $100 billion.” Lav called on Congress to provide up to $50 billion in state fiscal relief to close about half the budget shortfalls, with $30 billion to $35 billion used as an increase in the federal share of the Federal Medicaid Assistance Program (FMAP), accompanied by a ban on states who reduce eligibility in that program and thereby drive up the ranks of the uninsured. “Without such assistance, the number of uninsured in this country could rise to 50 million,” she said.
The remainder of the relief could be made available to prevent cuts in education and other critical state programs, as well as to lower the likelihood that states will cut aid to localities.
U.S. Federal Reserve Board Chairman, Ben Bernanke, in testimony before the House Budget Committee did not mention Medicaid specifically, but said an injection of federal money to bolster state services included in a stimulus bill would help the national economy.
National Governors Association Executive Director, Ray Scheppach said the chances of Medicaid funds being included in such a package have "very much" increased from earlier this year, when the first stimulus package was passed without such funds.
U.S. Senate Majority Leader, Harry Reid (D-NV), speaking in Reno, agreed a stimulus package was needed but would not support a similar package passed in February.
“I didn’t like what Bush came up with to dole out federal money. It was ridiculous.” Adding, “We need to have a stimulus package that brings jobs, and builds roads. Lets take care of our dams. Right here in Reno there are sewer systems that need to be built, water systems that need to be worked on, and schools that need care.”
Lav says when the Senate returns in mid-November, it needs to adopt the House passed bill that provides additional weeks of unemployment benefits to jobless workers. “These dollars will quickly be put into local and state economies as the workers spend the funds on services and goods needed for themselves and their families.”
Nevada lost $19.7 million in FMAP funds with a readjustment of its federal share from 52.64 percent to 50 percent, which took affect this October, 2008.
Thirty-nine states face current budget shortfalls, and Nevada is one of 27 states facing mid-year budget shortfalls. Initial estimates of mid-year gaps nationally total $12.3 billion.
Reid says he won’t get involved in the state budget shortage, stating he is not going to tell the state government what to do. “There are a lot of things we can do such as help the FMAP, and use CDBG money so local entities can use mortgage revenue bonds and other monies to purchase homes.
According to the Centers for Medicare and Medicaid Services (CMS), Office of the Actuary, state and federal spending on Medicaid will total about $339 billion in 2008, and will rise at a rate of 7.9 percent annually to $674 billion by 2017.