Medicaid funding boost unlikely this session

Posted: Wednesday, December 19, 2001

FAIRBANKS (AP) -- Prospects are dimming in Congress this session for a boost in the federal money that helps Alaska and other states provide health insurance to poor people.

Congress is in its final work week of the year.

Gov. Tony Knowles asked for a higher Medicaid match rate in mid-November as he prepared to release his state budget proposal. In a letter Nov. 13 to Sen. Frank Murkowski, R-Alaska, he said recent changes in the federal rate would cost Alaska $10.4 million in the coming fiscal year if nothing were done.

Murkowski, in response, wrote to the top Democrat and top Republican on the Senate Finance Committee, which is in charge of writing an economic stimulus package. That package is probably the last legislation to which a rate increase could be attached.

''By raising matching rates, we can provide an immediate infusion of federal dollars to support our state's worthy efforts,'' Murkowski wrote to Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa. ''Clearly, our states and our economy need this assistance.''

Whether Murkowski's appeal had an effect could not be determined Monday. Calls to Baucus' and Grassley's offices were not returned.

Even if the senators do agree to boost Medicaid, though, the larger economic stimulus bill may die over other disputes. Republicans and Democrats have yet to agree over what mix of worker benefits and tax cuts is appropriate.

John Taber, an associate director in Knowles' Washington, D.C. office, said Monday that states are closely watching the situation but have not heard any news yet. The possibility of a boost in Medicaid received much discussion at a National Governors Association meeting Monday morning, he said.

''We know that the White House is opposed to it, so that certainly is a dampening factor in all of our expectations,'' Taber said.

Knowles did not want to cut programs supported by the $10.4 million in federal Medicaid money, so he proposed to increase state spending instead. That increase was part of the overall $180 million boost in state general fund spending that he proposed last week.

Federal and state governments split Medicaid costs roughly 50-50. The federal government, however, pays a higher percentage in states with higher per capita income. Over the past several years, Murkowski has obtained further changes, just for Alaska, that pushed the federal rate to 60 percent for the first time.

Knowles, in his letter to Murkowski, said the federal government has changed its method of calculating the per capita income. That change nullified the most recent adjustments Murkowski obtained, Knowles said, so the federal rate was expected to fall back to 58 percent in federal fiscal year 2003.

Murkowski, in his letter to Baucus and Grassley, said he objects to the practice of linking Medicaid adjustments to per capita income.

''Never does it account for the high costs of running a health care network in a state that has, on average, just one person per square mile,'' he said.



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