Medicaid funding boost unlikely this session

Posted: Wednesday, December 19, 2001

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

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

Murkowski then asked the top Democrat and Republican on the Senate Finance Committee, which is writing an economic stimulus package, to include the increase. That package is probably the last legislation to which a rate increase could be attached.

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 and Congress is in its final work week of the year.

John Taber, an associate director in Knowles' Washington, D.C. office, said states are closely watching the situation.

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

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 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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