Congressional Budget Office Director Peter Orszag said that an increase to Medicaids Federal Medical Assistance Percentage, or FMAP, could be included as part of a broader economic stimulus package, but added that other measures could have a bigger and more immediate impact.
We have it as a medium, Orszag said in reference to a number of other policies the nonpartisan CBO is studying. Lawmakers are expected to include some of those measures in a legislative package meant to boost the economy. It depends where (the money) goes and how the states respond to it.
Appearing before members of the Senate Finance Committee, Orszag laid out a number of short-term economic stimulus possibilities. Orszag said that an extension or expansion of unemployment benefits and a temporary increase to the food stamp program would have the most immediate effect, while a lump-sum refund or temporary tax reductions would have a big impact, but potentially poor timing.
Last year, the federal government spent $172 billion on Medicaid payments, while states spent $128 billion, the CBO said. The current federal matching rate is 57% nationwide, though it varies from state to state. A temporary increase in federal dollars would reduce the amount of funding that states need to spend out of pocket to provide the same services, Orszag said in his written testimony.
A stimulus package in 2003 included a 2.95% increase to the match rate, which lasted five financial quarters and pumped about $10 billion to the states, the CBO concluded. More than half the states reported that the infusion of dollars meant that they could sidestep or delay cuts to Medicaid.
Senate Finance Committee Chairman Max Baucus (D-Mont.) told reporters that a boost in FMAP funding is under consideration, but that its too early to tell if it would be included in a final piece of legislation. -- by Matthew DoBias
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