June 3, 2010

Dear Senators Reid and McConnell: 

The National Conference of State Legislatures (NCSL) again expresses its support for provisions that would extend the enhanced Medicaid match established in the American Recovery and Reinvestment Act (ARRA) for an additional six months to June 30, 2011. We urge the inclusion of such provisions in H.R. 4213 when the Senate takes up this legislation. We further urge expeditious resolution of this issue that would provide funding certainty to states as FY 2011 budgets and appropriations bills are adopted. 

The need for the extended Medicaid match assistance remains the same. Numbers of individuals continue to become Medicaid-eligible as a result of the recession. The Medicaid program remains a critical component of state efforts to provide assistance to individuals and families who have lost jobs and health insurance. While there are signs of economic recovery, it is far from robust enough to boost state revenues or to reduce levels of unemployment. Even with the ARRA enhanced match, overruns in state Medicaid programs continue to occur. States continue to address sizeable budget gaps that have compelled state lawmakers to make dramatic programmatic and revenue changes in order to ensure balanced general fund budgets. 

Because the enhanced Medicaid match has been included in various pieces of legislation that have passed both houses, many states have assumed receipt of these funds in their FY 2011 budgets and appropriations measures. The attached survey shows what states have or have not assumed an extended enhanced Medicaid match and its potential impact on next year’s state budgets. Some states have not assumed the extension because they did not conduct sessions in 2010 or because they adopted biennial budgets last year. All states, nonetheless, would benefit from and have the procedural and fiscal tools necessary to utilize an extended Medicaid match. 

If you have questions regarding this letter or the attached report, please contact Michael Bird (202-624-8686; michael.bird@ncsl.org) or Joy Johnson Wilson (202-624-8689; joy.wilson@ncsl.org).

Thank you for your consideration and we look forward to a continued dialogue on stabilizing and improving the Medicaid program. 

Sincerely,

Senator Don Balfour, Georgia
President
National Conference of State Legislatures 

Senator Richard Moore
President-elect
National Conference of State Legislatures 

cc. Members of the United States Senate

Attachment 

FMAP Extension and the Impact on States

April 29, 2010

The ongoing congressional debate on Capitol Hill over whether to provide a six-month extension to the enhanced Federal Medical Assistance Percentages (FMAP) for states could have some major consequences on state budgets for the upcoming fiscal year. The $25.5 billion extension of provisions in the American Recovery and Reinvestment Act (ARRA) would cover the period between Jan. 1, 2011 and June 30, 2011, which represents the second half of fiscal year (FY) 2011 for nearly all states. Increasing demands that any “jobs,” supplemental appropriations or emergency legislation be offset with revenue adjustments or spending reductions has emerged as the dominant factor in potential passage of H.R. 4213, the FMAP extension bill, and related legislation.

As of Apr. 29, 2010, at least 29 states have finalized their budget plans for FY 2011. Most of the remaining states plan on adopting their FY 2011 budgets before June 30. 

This brief provides information on all 50 states. It is based on data collected from legislative fiscal directors in April 2010. It includes information on: 

• Whether states have budgeted on the assumption that Congress will approve a six-month extension to the FMAP.
• How much states have budgeted for the FMAP extension.
• Whether states have developed any budget contingencies in the event the FMAP is not extended by Congress. 

Table 1 provides further details on state responses.

Budgeting for an FMAP Extension

Most states have budgeted for the upcoming fiscal year, FY 2011, on the assumption that Congress will approve a six-month extension to the enhanced FMAP. Thirty states reported that their budgets, either proposed or already enacted, assume Congressional approval of the six-month extension to the FMAP. 

In Kansas, the budget being considered by the House of Representatives assumes an enhanced FMAP extension while the Senate proposal does not. The North Carolina budget was adopted in 2009 but the governor’s recommended budget adjustments for the biennium are based on the assumption that the FMAP will be extended. 

Twenty states have not budgeted on the assumption that there will be an extension to the enhanced FMAP. Eight of these states adopted their biennial budgets during 2009 legislative sessions, well ahead of any discussion of a possible six-month extension: Indiana, Montana, Nebraska, North Dakota, Ohio, Oregon, Texas, and Wyoming.  

Amount Budgeted for FMAP Extension

States that included an FMAP extension in their budgets assumed amounts ranging from $33.7 million in New Hampshire to $1.5 billion in California. These are significant amounts in light of the projected budget gaps that most states have had to address for the upcoming fiscal year. Thirty-eight states and Puerto Rico recently reported that they were dealing with a cumulative projected budget gap of $89 billion for FY 2011. [1]

Alabama reports that its FY 2011 budget assumes $197 million from an FMAP extension. Georgia’s soon-to- be-adopted budget assumes $370.5 million. In Illinois, the governor’s introduced budget assumes the proceeds will total $737 million.  Michigan is assuming $514 million. And in Washington, it was presupposed from the beginning of the budget process that the FMAP would be extended; the $479.8 million that was allotted is 17 percent solution of the state’s $2.8 billion shortfall this biennium.

State Contingency Plans

Only nine states out of the 30 that are budgeting for an FMAP extension have budget contingencies in place should Congress not approve a six-month extension. Contingency plans include:

• Eliminating some Medi-Cal eligibility categories and optional benefits in California. 
• Depleting reserves in Idaho.
• Reducing allotments in Maine.
• Transferring $200 million to the general fund from a local income tax reserve account in Maryland. 

 [1] More information on current state fiscal conditions can be found in NCSL’s report, State Budget Update: March 2010, which can be found at: http://www.ncsl.org/?tabid=20157 .