By Joe Touschner

As we’ve noted previously Congress has yet to reach agreement on extending the increased Medicaid funding it originally granted in the 2009 economic recovery legislation.  The increased payments are scheduled to end in December 2010, but most state budgets are looking no better than they were a year and a half ago.  It seems like federal lawmakers would like to help states maintain Medicaid for the children and families who need it–Medicaid fiscal relief has passed both houses of Congress separately, but never in the same piece of legislation, so it is not law.

About half the states responded to this demonstrated interest by Congress–they included a six month extension of the increased Medicaid funds in their fiscal year 2011 budgets (see the map that employs data from the National Conference of State Legislatures) .  Since fiscal 2011 is already underway, states will be forced to make jarring budget adjustments if the extension does not come through.  

(Click to enlarge graphic)

In its absence, states will face budget holes of tens of millions in smaller states to more than a billion dollars in states like New York and California.  That means cuts to services state residents depend on or tax increases at a time when the economy remains fragile.  And because federal law protects eligibility standards and procedures in Medicaid, only limited parts of the program can be cut by state policymakers.  That makes the Medicaid funding extension an issue for all parts of the state budget–from education to economic development to the support for local governments that funds police and fire services.  Failure to extend Medicaid funding will have a ripple effect through the budgets and economies of many cash-strapped states.

The U.S. Senate moved yesterday toward extending unemployment benefits for those who have lost their jobs, recognizing that the recovery has not yet reached many workers.  It hasn’t reached state budgets either, so an extension of Medicaid fiscal relief would help states maintain the services that families are counting on now more than ever.