Health Care in the President’s Budget: Extension of ARRA FMAP Increase

While there hasn’t been much good news coming out of Washington lately on the health care front, the President’s newly released FY 2011 budget offers some positive developments.

Most notably, the budget proposes $25.5 billion to extend the temporary FMAP increase for another six months, through June 2011. The FMAP increase and its accompanying maintenance of effort provision, which was included in last year’s stimulus bill (ARRA), has been an incredibly important way to help states maintain their Medicaid programs during an economic downturn. Set to expire at the end of the calendar year (which is right in the middle of states’ fiscal year), the Administration’s proposed extension would provide critical relief to cash-strapped states. Since the budget extends the recovery act provision, states would still need to maintain Medicaid eligibility and enrollment/renewal procedures to receive the increased FMAP.

The budget also assumes savings from health reform, signifying the President’s continued commitment to passing a bill. Using the average of the savings estimated under the House and Senate bills, the budget projects roughly $150 billion in savings over 10 years.

The budget also proposes:

 * Extending, through the end of 2010, the COBRA health insurance premium assistance program established under the recovery act (set to expire at the end of this month).

* Providing an additional $290 million for community health care centers, $110 million for continuing investments in health IT, and an increase of $250 million for Medicare, Medicaid, and CHIP fraud and abuse initiatives.

* Allocating funding to strengthen rural health care, expand Indian health services, increase wellness and prevention activities, and conduct research on the comparative effectiveness of medical options.

* Establishing Medicaid and Medicare demonstration projects to coordinate care and lower costs for seniors and those with chronic conditions.

Also of note is a 229% increase in state Medicaid performance bonus payments. This change reflects the Administration’s expectation that states will continue to enroll more children in Medicaid, resulting in an increase from $73 million in FY 2010 to $240 million in FY 2011 in payments made to states.

The President proposed a couple of measures that could impact programs for low-income families moving forward. This includes a 3-year non-security discretionary spending freeze (although Medicaid, CHIP, and most health programs were excluded) and the creation of a bi-partisan fiscal committee, which is charged with, among other things, addressing the growth of entitlement spending.

Expect to hear more from us in the coming months as Congress begins its work to have a final budget signed by the President by October 1.