States will get $20 billion in much-needed relief, including $10 billion to increase federal matching for Medicaid, now that both chambers of Congress have approved a 10-year, $350 billion compromise tax bill.
President Bush is expected to sign the legislation, which the House passed early May 23 with a vote of 231-200. Later in the day, the Senate approved the bill 51-50, with Vice President Dick Cheney casting the deciding vote.
In addition to cutting a number of taxes for businesses and individuals, the tax bill will help struggling state governments by boosting the federal medical assistance percentage, or FMAP Medicaid matching rates, by 2.95% until Oct. 1, 2004.
The other $10 billion in state aid will be divided evenly between 2003 and 2004 for use in government services such as law enforcement, social services, public safety, education, job training and others. Funds will be distributed relative to state population or at a minimum of $50 million, whichever is higher.
Increased Medicare reimbursement to rural hospitals, which had been included in a previous version of the bill approved by the Senate, was not included in the final package. That $25 billion amendment, sponsored by Senate Finance Committee Chairman Charles Grassley (R-Iowa), would have increased payments to rural health providers and made permanent a reimbursement equalization fix approved by Congress in 2003.
Grassley is likely to pursue the measure when the Senate picks up Medicare reform debate this summer.