By Tom Curry National affairs writer
msnbc.com
updated 2/2/2010 12:04:54 PM ET 2010-02-02T17:04:54

Claim: President Obama's budget would give states another cash infusion to sustain Medicaid programs.

Governors and state legislatures have been struggling to keep paying for Medicaid, the joint federal-state health insurance program for poor people. On average, Medicaid now ranks equal to public education as the biggest expenditure in state budgets. Since last year, states haven't had the tax revenues they did when the economy was thriving. But their caseloads increased by 5 percent last year and are expected to increase by 6 percent this year. More than the half the states have had to cut Medicaid spending or eligibility. Last year's stimulus bill gave states a temporary increase of 6.2 percent in their federal Medicaid matching funds as well as additional amounts for states with the highest jobless rates. The stimulus sent states about $87 billion in additional Medicaid money, but that money was set to end in December 2010.

Fact or fiction?
Fact. The Obama budget proposal for fiscal year 2011 (which begins on Oct. 1) includes $25.5 billion to support states by keeping the additional Medicaid funds flowing through June 2011. "Obviously we're supportive" of the proposed money, said Ann Kohler, director of the National Association of State Medicaid Directors in Washington. She points out, "There still will be a cliff, but it will be in June (2011) instead of in December." And she points out that even in a recovery, state revenues lag about three years behind economic growth. Meanwhile, looming over the states is the uncertainty of whether Congress will enact an insurance overhaul, which would include a huge expansion of Medicaid eligibility. After an initial few years of the federal government paying the cost of that expansion, the states would have to pay for much of it.

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