Medicaid funding issue offers tough practical, philosophical tests

06/23/2010 11:26 AM

(WITH VIDEO) Congress’ hesitancy to extend federal aid to states for the Medicaid program has put Kentucky officials on edge as it raises the specter of blowing a $238 million hole in the newly-minted state budget.

But it also has presented leaders and candidates — especially those who have eschewed additional government debt — with a philosophical conundrum.

The issue is whether Congress should pile on more spending, in this case $24.2 billion, to extend for six months additional aid to states for the Medicaid program. Republicans in the Senate and both Republicans and some Democrats in the House have tabled such legislation in recent weeks.

Senators, including Senate Republican Leader Mitch McConnell, voted last week to stall a broader $180 billion piece of legislation aimed at providing additional unemployment benefits to those out of work that also included the provision giving states additional help for Medicaid. McConnell said he was concerned about the cost.

Republican U.S. Senate candidate Rand Paul, declined to answer questions about the Medicaid funding issue to cn|2 Politics earlier this month. In a radio interview with Sue Wylie last week, Paul somewhat sidestepped the question about the larger jobless benefits bill that contained the Medicaid provision.

“What we have to do is pay for it. That’s the real question,” Paul said. “We should do ‘pay-as-you-go … It’s all a matter of priorities.”

On Saturday, cn|2 Politics caught up with Democratic U.S. Senate candidate Jack Conway, who said he also believes the government should find ways to pay for any new spending but wants to see Congress act “so we don’t have Medicaid budgets that are collapsing around the country.” Here’s what he said:

More than 30 states, including Kentucky, built their budgets on the assumption that Congress would extend for another six months — from Jan. 1, 2011 through June 30, 2011 — an increase in the amount of money the federal government pays states to administer the Medicaid program, a state-federal partnership that covers the health costs of the poor and disabled. Congress initially boosted that reimbursement rate to the states as part of the 2009 federal stimulus bill.

So not getting that extension would cause a $238 million shortfall in Kentucky’s two-year budget, which lawmakers just approved in a special session last month.

Senate President David Williams, a Burkesville Republican, said in a phone interview Tuesday that he believes federal and state government spending needs tightening and reform but singled out two areas in which he said need additional resources: road construction and Medicaid.

“I have told Sen. McConnell that I felt like much of the (federal stimulus) money was used to continue spending at a level that was not sustainable,” Williams said. “But I feel differently about transportation funds and Medicaid funds.”

Williams said the recession has swollen Kentucky’s Medicaid rolls — now with more than 850,000 Kentuckians — as it has in other states. So Kentuckians need that money and the state budget needs to remain balanced.

“I understand the situation the federal government is in. They cannot continue to borrow money and increase the debt,” Williams said. In addition, he said the health care bill Congress passed in March could both add to the short-term debt issue and increase the number of Kentuckians who would qualify or need Medicaid.

“It’s going to be a challenge, there’s no question,” Williams said.

Both Williams and Democratic Gov. Steve Beshear said in separate interviews that Kentucky doesn’t have a back-up plan if Congress doesn’t pass the extension by the end of the year.

Here’s what Beshear had to say on Saturday:

- Ryan Alessi with video produced by Dan Pelstring

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