HEALTHIER MEDICAID

There’s no mystery to why the National Governors’ Association is enthusiastically supporting a plan by Sen. Susan Collins to increase Medicaid funding by up to $9 billion over the next 18 months. State revenues, slammed by a combination of a tepid economy and a massive federal tax cut, are way down. The new Medicaid money, which would address the some fairly desperate health care shortages, has the added benefits of being nearly immediate and taking the pressure of some large anticipated state increases.

Maine could save $20 million annually through the proposed combination of higher Medicaid reimbursements and a Medicaid block-grant program. If the Senate takes up the legislation just after its Memorial Day recess, as expected, the money could be in state hands by mid-July, sooner if Health and Human Services is allowed to advance the payments. With a $180 million shortfall over the next 14 months, that money could make a big difference here.

Medicaid costs increased 11 percent last year and now are among the largest expenses states face. That’s one reason it was a prominent part of the discussion of an economic stimulus package earlier this year. That package was trimmed as the economy shows signs of slow recovery. But the effect on state budgets was huge – at least 44 states faced significant shortfalls.

The proposal to be offered by Sens. Collins and Ben Nelson is temporary, but it matches the most dramatic effects of the $14 billion loss to states ($30 million in Maine) as a result of the stimulus that did pass. Revenue reductions as a result of accelerated depreciation schedules go away after a couple of years, but that doesn’t mean states can expand Medicaid programs easily. Unless Congress is prepared to make the new money a permanent part of the federal Medicaid budget, the money is better as a bridge to help states over their budget shortfalls and provide time to look for ways to meet health-care demands without bankrupting either service providers or taxpayers.

It is not often that a federal-level politician takes the time to understand the difficulties faced at the state level. Sens. Collins and Nelson deserve added credit for suggesting legislation that benefits state capitals more than it benefits Washington. With the dozens of state searching for ways to both pay rising health-care bills and balance their books, this plan finds funding for both.