Upton, Hatch Echo Governors’ Concerns about Unreliable Funding for Medicaid Expansion

July 18, 2012

WASHINGTON, DC— House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Senate Finance Committee Ranking Member Orrin Hatch (R-UT) today echoed the recent concerns expressed by governors across the nation about the uncertain future of Medicaid funding and pressed Health and Human Services Secretary Kathleen Sebelius to outline all legislative and policy specifications on the president’s Medicaid “blended rate” proposal.

In the letter to Sebelius, Upton and Hatch wrote, “Under the Obama administration, the federal debt has reached an all-time high of nearly $16 trillion – levels that when considered as a percentage of our total economic output clearly hurt economic growth and stability.  With the Medicaid program expected to contribute to that debt by more than $5 trillion over the next 10 years – not to mention trillions more in taxpayer spending at the state level - it is understandable that governors are concerned about the federal government’s ability to maintain its commitment to such a high federal match for the long term.  As one governor recently noted: 'This is just another government program where the federal government will run out of money and they'll put it on the states again.'”

Upton and Hatch have expressed concern in the past about the Medicaid expansion and its implications for both federal and state budgets. While the program was enacted with a promise that the federal government would pick up much of the added cost of adding millions more Americans to the Medicaid rolls, their letter explains why more of these costs may eventually be passed along to the states. In either case, such an expansion is projected to cost over a trillion dollars and further exacerbate the fiscal strain on the program.

The House and Senate leaders continued, “The president’s FY2013 Budget proposal reinforces those concerns from the governors. In his FY2013 Budget plan, the president outlined a provision that would ultimately decrease the federal match for the newly eligible Medicaid beneficiaries.  The president calls for the application of a single blended rate to Medicaid and CHIP that would save nearly $18 billion over 10 years.  A similar policy was included in the president’s deficit reduction recommendations in 2011, which called for up to $100 billion in federal Medicaid savings over 10 years.

“As you know, a blended federal Medicaid rate that reduces Medicaid spending over time is a policy that would reduce federal funding to states through a reduced federal match, notably a reduction to the enhanced match to States for the newly eligible Medicaid beneficiaries.  This policy could have a dramatic effect on how much a Medicaid expansion could cost state governments after 2014.  We believe the administration should release all the legislative and policy specifications for its blended rate proposal as governors and State legislatures prepare to make a decision on whether or not to implement the largest expansion of Medicaid in history.”