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Idaho not among states asking for more federal Medicaid money

Idaho not among states asking for more federal Medicaid money

Idaho Freedom Foundation staff
June 16, 2010

Idaho could be better off than other states if Congress doesn’t extend a part of the stimulus plan that sends more money back to states to pay for Medicaid programs.  While governors of other states have asked Congress to continue to pay for more Medicaid spending, elected officials in Idaho have shown little support for the plan.

“Relying on the federal government to step in and bail out state budgets is not the answer,” Rep. Mike Simpson said in a prepared statement.  “While I recognize that states including Idaho are counting on the federal dollars to help them balance their budgets, we must have fiscal accountability on the federal and state level to avoid leaving our children and grandchildren with huge debts to pay off.”

Part of the $787 billion stimulus plan approved last year by Congress was a plan to increase the percentage of Medicaid spending paid for by the federal government.  Both the federal and state government pay for Medicaid, which provides medical services to low-income children and adults as well as people with specific health needs.  Under the standard formula, the federal government pays 69.8 percent of Medicaid costs, but the stimulus raised that to 78.4 percent.  That higher matching rate runs out at the end of December.  If it’s not extended by Congress, it would cost the state $68 million in its next budget, though the state has a plan to pay for that out of a reserve fund.

Idaho’s four members of Congress all voted against the stimulus last year, and aren’t showing support for extending the Medicaid match.  “Here we go again - this is basically the extension of a stimulus bill, and how much longer do we have to go on with stimuluses?” said Lindsay Nothern, a spokesman for Sen. Mike Crapo.  Rep. Walt Minnick and a staffer for Sen. Jim Risch also said they were concerned because the plan in Congress doesn’t include a funding source for the Medicaid payments.

Walt Minnick

“Congress needs to pay for what it spends,” Minnick said in a prepared statement.  “If we pass something without paying for it, Idaho taxpayers will be forced to foot the bill one way or another.”

The Medicaid match was stripped from a plan approved by the House – Minnick and Simpson voted no – but could return in the Senate version of the plan currently being crafted.  A six-month extension could cost $24 billion nationwide.

State officials have not strongly lobbied Idaho’s members of Congress to keep up the federal share of Medicaid spending.  Gov. Butch Otter was one of three governors across the country not to sign a letter sent in February calling for the extension of the program.  Otter’s spokesman, Jon Hanian, said the governor didn’t sign the letter or lobby Congress because of the uncertainty of the extension and other stimulus programs.

“We figured this was going to be a mess as well, and that’s why we budgeted the way we did and put money aside,” Hanian said.

The $68 million for Medicaid would come from the Idaho Millennium Fund, which was created after a 1998 settlement with tobacco companies.  Earnings from the Millennium Fund and its permanent endowment fund pay for grants to anti-drug and anti-addiction programs, though millions from the fund went to general state spending earlier this decade during difficult economic times.

State lawmakers haven’t take formal action linking the Millennium Fund money to state Medicaid spending, but could do so early next year.  There’s general agreement that, if Congress doesn’t extend the Medicaid match, that would be a likely action by lawmakers.  While other reserve funds were tapped to prevent further reductions in the next state budget, the Millennium Fund went untouched.

“We’re all hoping that it does pass,” Tom Shanahan, a spokesman for the Department of Health and Welfare, which manages the state Medicaid program, said about the extended match.  “It would help if we didn’t have to use the reserve funding for it.”

Richard Armstrong

Spending $68 million in the next budget year would nearly exhaust the Millennium Fund, so the state would need to find close to $140 million to cover Medicaid spending through 2012.  DHW Director Richard Armstrong told IdahoReporter.com in March that the federal matching rate is one of the biggest problems Idaho faces.

Even if Congress doesn’t approve the plan, Idaho would likely be in better shape than other states.  Washington Gov. Chris Gregoire said that state could cut 6,000 state jobs if the funding isn’t approved, according to the Seattle Times.  A report by the National Conference of State Legislatures said most states have balanced their budgets assuming that Congress will approve the higher matching rates.

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