By Jocelyn Guyer

The pressure to extend the temporary increase in the federal medical assistance percentage (FMAP) for Medicaid included in last year’s stimulus bill is building. Widely credited with helping states through one of the worst fiscal crises on record, the provision also has been vital in stabilizing Medicaid coverage for children and others in families facing job loss. Currently, the provision is slated to expire December 31, 2010, right in the middle of most states’ fiscal year. With most state legislatures in session right now trying to craft next year’s budgets, they are looking for some assurances that the federal government will continue the extra help with Medicaid.

It looks increasingly likely that the nation’s lawmakers may adopt an extension. In December of 2009, the House of Representatives passed a six-month extension that would provide states with fiscal relief through June 2011, which coincides with the end of most states’ fiscal years. President Obama included the same proposal in his budget in February.

Now the Senate, which has been the most skittish on the issue, is planning to take the extension up as part of a larger jobs bill. On Monday, Senate Majority Leader Reid and Senate Finance Committee Chairman Baucus included the 6-month extension in a jobs bill. This bill also continues COBRA benefits and unemployment insurance through the end of the calendar year. (And, nope, this isn’t the same jobs bill that Senator Bunning of Kentucky has been holding up on the Senate floor. The bill that caused Senator Bunning to miss the Kentucky-South Carolina game extended COBRA subsidies and unemployment insurance only for a few more weeks and does not include an extension of Medicaid fiscal relief.)

Outside the Beltway, a bipartisan group of 42 Governors of states and five Governors of U.S. territories have signed a letter in support of the FMAP extension. They state that “the length and depth of the recession means states and territories will continue to face significant budget shortfalls long after the enhanced FMAP provisions expire at the end of this calendar year.” 

As in the past, Congress expects states to hold steady on their Medicaid eligibility levels and enrollment procedures in exchange for the extra federal help. One new twist to the “maintenance-of-effort” provision may be the addition in the Senate of a requirement designed to prevent Governors from having their cake and eating it too. Stung by criticism of the stimulus bill last year by Governors who willingly accepted the federal dollars, the amendment will likely require Governors (or possibly State Legislatures) to specifically request the additional help from the federal government. 

With unemployment benefits and COBRA subsidies now expected to expire at the end of March/early April, there will be pressure for Congress to act again quickly. This time, it looks more likely that Congress will include an extension of the FMAP if it can find its way forward on the next jobs bill.