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Obama Budget Would Plug a Medicaid Gap

As we’ve written here before, Medicaid funding is a tricky business, not least of all because program enrollment always jumps in times of economic turmoil, when state budgets are least able to absorb the additional costs.

In recognition of that flawed formula, Congress last year provided an increase in the federal portion of Medicaid funding — an $87 billion provision designed to prevent low-income families from losing health coverage amid the recession. Trouble is, that money runs out at the end of this year — exactly halfway through the fiscal year of most states. That looming deadline has left state legislators in a pickle, unsure whether to craft their budgets under the assumption that the extra federal funds will keep coming, or expire.

Today, those officials will be cheering: The Obama administration’s budget blueprint is pushing for an additional six months of enhanced federal Medicaid payments — a move that would allow states to stabilize their Medicaid rolls trough the end of fiscal year 2011. The Wall Street Journal reports:

Obama’s budget plan estimates the U.S. will spend $317.6 billion in grants for state health programs in fiscal 2011, up 7.8% from an estimated $294.6 billion in fiscal 2010 and up 18.4% from spending in fiscal 2009 of $268.3 billion.

Of course, this is different from actually fixing Medicaid’s funding flaw.

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