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Published: August 2010

Senate must act to give states extensions on federal Medicaid match

Coalition: Health Reform

A coalition of organizations, including Consumer Action, urged Congress to pass a jobs bill that includes a six month extension of the increased federal Medicaid match (FMAP) contained in the American Recovery and Reinvestment Act (ARRA).

Below is the full text of the letter:

The undersigned organizations representing millions of Americans who are concerned about the economy, job creation, health care, and public services urge you to pass a jobs bill that includes a six month extension of the increased federal Medicaid match (FMAP) contained in the American Recovery and Reinvestment Act (ARRA).  With state budgets in crisis, hundreds of thousands of public and private sector jobs threatened, and health care for millions of low-income Americans hanging in the balance, Congress must act now.

Every state except Vermont has a balanced budget requirement.  Due to the national economic recession, states’ revenues have fallen precipitously for several years and the need for public services has grown exponentially.  As a result, states are expected to face a cumulative budget shortfall of at least $140 billion for fiscal year 2011, on top of large shortfalls in fiscal years 2009 and 2010.  Medicaid is one of states’ largest budget items, with low-income families, hospitals, and providers depending on reliable federal support, especially during tough economic times.  The ARRA’s enhanced FMAP has provided a funding lifeline that minimized devastating cuts in Medicaid, education, public safety and other public services.  But, it must not end prematurely.

State and local government spending is important to our national economy and jobs.  Economists project that as many as 900,000 workers in both the public and private sectors could lose their jobs in the next year as states and localities continue to grapple with lower revenues, budget cuts and loss of federal funding.  Hospitals and other health care providers are often the largest employer in communities.  Moreover, state and local governments are key employers in rural areas, accounting for 18 percent of earnings compared to roughly 10 percent in urban areas. 

We have already seen the negative economic impact of cuts in state and local government spending: the United States Department of Commerce reported that the real Gross Domestic Product (GDP) lost .5% in potential growth in the first quarter of 2010 due to cuts in state and local government spending, a loss of $71.5 billion in growth and jobs.  This trend is expected to worsen in the latter part of 2010.  Allowing the enhanced FMAP to expire on December 31, 2010, in the middle of states’ current fiscal years, would be devastating to the national economy and the large majority of states – particularly to the 27 states that included the six month extension in their annual budgets.

All of the undersigned organizations urge you to pass a six month extension of the enhanced FMAP.  Our fragile economic recovery depends upon it.

Lead Organization

Families USA

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