By Joe Touschner

We’ve been following for some time the inconsistent progress of legislation that would extend increased federal Medicaid payments to states.  While versions of the legislation have previously passed both houses of Congress, the two chambers had not succeeded in making the extension law by agreeing to the same bill.  Today, they have, with the House interrupting its August recess to pass a bill approved by the Senate last week that includes both the Medicaid funding and more support for public schools.  The act will continue for six months a portion of the increased Medicaid funding that states have been receiving under the economic recovery legislation.  The funds had been scheduled to expire in December of this year, but instead will phase out through June of 2011. 

States have been receiving an extra 6.2 percentage points in federal matching funds for their Medicaid programs, plus an additional amount based on the state’s unemployment rate.  Under the extension, this will drop to 3.2 percentage points in January 2011 and 1.2 percentage points in April, again with an additional increase based on unemployment figures.  See this Center on Budget and Policy Priorities report for an estimate of the amount each state will receive over the first six months of 2011.

This extension will give states a bit more breathing room in their 2011 budgets.  The Medicaid and education funds will help protect not only health coverage and kids’ schooling, but should reduce pressure across states’ budgets.  Many states had already counted on the extension in the budgets they approved earlier this year, so Congress’s action is an important contribution to keeping those budgets intact.  State budgets remain challenged but it’s good to see Congress take action to protect important services that are helping kids and families today.