States say feds should pick up the tab on Medicaid expansion

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CMS: Medicare rate increase would boost SNF payments by $500 million
CMS: Medicare rate increase would boost SNF payments by $500 million

The federal government should assume the full cost of any Medicaid expansion under healthcare reform because of the enormous costs to individual states. That is according to an organization of state legislatures Wednesday in a letter to leaders of the Senate Finance Committee.

In its letter, the National Conference of State Legislatures highlighted the dire budgetary situation in which most states currently find themselves, and warned that any expanded financial responsibility on their part would be untenable.

"Cost shifts and unfunded mandates are insidious at any time, but are especially so now because state legislatures are struggling daily with the most drastic budget shortfalls in several generations," the letter stated to Sens. Max Baucus (D-MT) and Charles Grassley (R-IA), leaders of the Senate Finance Committee.

Current proposals in the House and Senate would expand the Medicaid rolls to include those individuals with incomes at or below 133% of the federal poverty line. The House proposal, H.R. 3200, would fund the expansion with federal dollars, but a proposed amendment would eventually shift 10% of the burden to states. The Senate plan would have states pay based, in part, on their Medicaid enrollment rates. Recently, California Governor Arnold Schwarzenegger (R) said that the proposals to expand Medicaid would cost his state up to $8 billion annually, adding to a current $26 billion budget deficit. (McKnight's, 8/5/09)