Kevin Sack has an illuminating piece in the New York Times on the conundrum that politicians – especially Republicans and Blue Dog Democrats – face while trying to balance a fiercely partisan political climate against the woes of a sagging economy. Case in point: Medicaid, one of the most expensive programs in every state in the country.
States got a huge boost in federal Medicaid funding last year, thanks to the stimulus package, and were fretting about what to do once the increased federal funding levels returned to normal after Dec. 31 of this year. (The program is paid for with state and federal dollars.) States assumed Congress would vote for at least a six-month extension that 42 governors – Democrats and Republicans – asked for in a letter sent to congressional leaders in February.
But, thanks to cries about out of control government spending and the deficit, House Speaker Nancy Pelosi admitted she couldn’t pass the tax and jobs bill without eliminating some spending. The extra Medicaid funds ended up on the chopping block.
Republican governors in particular, the aides said, had been reluctant to petition for relief while the party’s leaders in Congress were scorching Democrats for driving up the national debt.
“Governors need to make it clear that it is vital that their states receive this money, instead of blasting Congress for ‘out-of-control spending,’ ” said a senior Democratic aide in the House, speaking on the condition of anonymity because he was not authorized to talk about the issue publicly.
But the need to balance state and federal interests makes for awkward politics for some governors. Timing has made the conflict more pronounced, because state budgets typically do not recover until well after a national recession fades.
According to the Times, the Senate may restore the funding when it passes its version of the bill and the House could follow suit in conference. But the whole episode is a perfect example of how national political rhetoric doesn’t always line up with life on the ground and in the statehouse. It’s also a good example of how it’s incredibly difficult politically it is to scale back entitlement spending.
Over the years, some states have reduced their Medicaid eligibility and the services covered by the program to reduce their fiscal burden, but the additional federal funding via the stimulus was offered on the condition that states maintain their eligibility levels. The new health reform law made this requirement permanent and many states will have to increase their eligibility by 2014. In return, the states will get increased levels of federal funding. See how this works?