Congress Gives States Little to Celebrate at the Fiscal New Year

When I served as an aide in the Ohio Legislature, an annual tradition was the Rockin' Fiscal New Year's Eve Party, held on June 30th as a way for staffers to mark the end of the state's fiscal year (and every other year, the end of a grueling budget process).  With or without rockin' parties, 46 states end their fiscal years on June 30 and they will begin fiscal 2011 without the federal Medicaid support most of them counted on.  That extra support has helped states through one of the worst fiscal crises on record and has been vital in stabilizing Medicaid coverage for children and others in families facing job loss.  The U.S. Senate last week failed to advance a bill that would have continued the federal government's commitment to enhanced Medicaid funding through the end of fiscal 2011--instead, under current law, that support will dry up halfway through the year. 

Congress's failure to provide extra funds for Medicaid will potentially have a real impact on many families who are still struggling to stay afloat through the recession, depending on state policymakers' responses.  The health reform law will keep states from cutting back on eligibility levels or procedures for Medicaid and CHIP, but states may react to the decline in federal Medicaid support in other harmful ways.  They might choose to cut payment rates to doctors and hospitals or make it tougher for families to get Medicaid or CHIP coverage by cutting state workers who process applications.  Either of these steps could mean preventing kids from getting the care they need.

While it's still possible that Congress will continue the needed Medicaid support before it expires in December, state lawmakers who thought they had completed their 2011 budgets will likely have some more tough choices to make in coming months.  Advocates for kids and families will be working to show that the smart choice is to protect the health coverage that keeps kids healthy and helps families through the recession.