Medicaid fund increase taken out of stimulus bill

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Medicaid removed from economic stimulus package. Source: Federal Grants  

Republicans this week questioned whether a temporary increase in federal Medicaid funds for states will be effective, which has prevented efforts to include the increase in an economic stimulus package.

"We'd rather grow the economy than the government, and giving money to states is more inclined toward the government," said Sen. Conference Chairman Lamar Alexander, R-Tenn., reported CongressDaily.

Congressional aides said there is little enthusiasm about the increased Medicaid match for states, which could re-emerge as part of the package.

Unemployment benefits and food stamp increases appear to be higher priorities for state aid than Medicaid. If the Medicaid money is not included in the House version of the stimulus, it might cause problems in the Senate, reported CongressDaily.

Sen. Ben Nelson, D-Neb., who in 2003 insisted on a $20 billion Medicaid increase as part of a $350 billion tax bill, said Wednesday he wants to see an even broader state aid package in the stimulus bill.

"I would like to see us ... do something that would involve Medicaid, healthcare, education, block grants," Nelson said. "And then I'd like to see another piece that is about infrastructure, roads and highways, and stuff like that, because that's stimulus."

Nelson added that any of the state aid could be given "with strings attached" in the form of when and how the money is spent. According to CongressDaily, Republicans and some Democrats worry that without such strings, state governments will just put the extra money toward general revenue.

Advocates of increasing the federal matching rate for state Medicaid programs said past experience has shown an immediate positive impact to the tune of $1.24 in economic demand for every dollar spent.

President George W. Bush has signed a temporary Medicaid increase before, an indicator the administration might accept such language again, but the last time Bush signed off on such an increase, it was in exchange for a multibillion-dollar tax bill largely drafted by Republicans, according to CongressDaily.

House liberals have drafted a Congressional Progressive Caucus letter to Speaker Pelosi makes the case for targeting lower-income Americans, including extra Medicaid money to states, reported CongressDaily.