States Panic as $24 Billion in Medicaid Funds Still Missing

It’s a story that has dropped out of the news since the jobs bill, also known as H.R. 4213 and the extenders’ package, died at the end of June. Since then, Senate Democrats have continued fighting for a $33 billion federal extension of unemployment insurance. But it is less clear they will fight to pass $24 billion in Medicaid funding for states — funding that a number of local governments were counting on to continue providing access to health care for low-income Americans.

Over at our sister publication, The Michigan Messenger, Todd A. Heywood has a story on the “devastating” cuts for Michigan, where legislators are scrambling to figure out whether Congress might still act and plug the $500 million hole, or whether they need to start slashing budgets now — or if the lack of Medicaid funds might actually cause a shutdown of government if legislators cannot decide on a fix by Oct. 1.

Lawmakers from both sides of the aisle say that without the money, the state is in trouble. State Sen. Tom George (R-Texas Township) says he expects that state agencies would face budget cuts of between 15 and 20 percent across the board. [...]

Rep. Mark Meadows (D-East Lansing), who chairs the House Judiciary Committee, says he was told by state officials the stalled Medicaid funding and the possibility of it not coming through was “the worst possible news.”

“We have to set all brand new budget priorities,” Meadows says. “If that money is not there, we have a much larger budget hole. And mostly the social welfare budgets will take huge hits.”

Rep. Barb Byrum (D-Onondaga) used the same word Bauer used — “devastating” — and said she just doesn’t know what’s left to trim. “We have been cutting and cutting and cutting,” she said.

The roadblock to raising new revenue, as always, is the Republican-controlled Senate, and George says he does not expect the Senate will approve any new revenue streams even to prevent a portion of the nearly $2 billion in cuts that would be needed. … “We can raise taxes or we can cut funding. The question is which one of the two is the public more willing to swallow?”

Of course, cuts to Medicaid funding do not translate directly into cuts to Medicaid. States might try to patch the gap by moving money around from other programs — shuttering parks, turning off street lamps, cutting back on trash services, any number of ways. But it is not just the Medicaid funds that states are worried about. Teachers, firefighters and other public employees are on the chopping block too, as the state fiscal crisis peaks.