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FOR IMMEDIATE RELEASE: January 8, 2009

WITH LOCAL BUDGETS ACROSS UPSTATE NY FACING HISTORIC CRUNCH SCHUMER ANNOUNCES FIGHT TO BRING MILLIONS DIRECTLY TO UPSTATE NY COUNTIES IN ECONOMIC STIMULUS PLAN TO EASE ALREADY-STRESSED BUDGET GAPS, AVOID PROPERTY TAX HIKES


Schumer Leads Push to Have Economic Stimulus Plan Bring Direct Aid to NYS Counties & Localities As He Calls For $100 Billion Boost in Fed Medicaid Money

Upstate Counties Staggering Under Medicaid Costs - Localities Expect to Pony Up A Shocking $2 Billion for Medicaid Next Year

Schumer: Counties Forced to Pay For Medicaid Should Get Their Fair Share of Medicaid Relief - Schumer to Detail County By County Impact of His Plan

With New York State localities facing historic budget deficits, U.S. Senator Charles E. Schumer today announced his push for additional millions in direct relief to Upstate New York counties from the Federal Medical Assistance Percentage (FMAP) to help stave off property tax hikes and close budget gaps. While negotiations are underway to increase FMAP in the economic recovery package, Schumer pledged today to help counties and localities that are struggling with increased costs of Medicaid get their fair share of Medicaid relief as demand for health care grows during the economic crisis. Schumer said that this relief to counties will flow through local communities, creating jobs, financing the purchase of medical supplies and services, and help to ease budget gaps and prevent property tax hikes.

 

“There are no two-ways about it, we should give direct aid to counties struggling to ease big budget gaps and avoid property tax hikes on families,” Schumer said. “Our counties are overburdened by Medicaid costs and they should get their fare share of relief in the economic recovery plan. My plan would bring millions of additional dollars directly to the counties to help them in these very tough economic times.”

 

The economic downturn has strained county and state budgets alike. While state budget concerns have been well publicized, counties have also been faced with huge budget gaps and have been forced to raise local property taxes and make severe budget cuts. At the same time, the downturn has triggered declines in tax revenue that inhibit states’ and counties’ ability to meet rising Medicaid program costs as enrollment spikes during economic hard times. Since the enactment of the Medicaid program in 1966, counties in New York State have been required to share in the costs of services. New York is one of seventeen states where local governments share with the state in Medicaid participation. New York and North Carolina are the two states where local government pays the highest percentage. Counties are mandated by the state to contribute approximately $7 billion annually or about 32 percent of the non-federal share of the State's Medicaid Program.

 

Recognizing that New York State counties are in dire need of direct fiscal aid and are forced to share the cost of Medicaid, Schumer - a member of the Senate Leadership and the Finance Committeewhich has jurisdiction over Medicaid - today said he will fight to make sure that New York State counties and localities receive millions in direct aid from FMAP in the economic stimulus plan.

 

Schumer has called for a $100 billion boost for FMAP in the economic stimulus plan, and, under his plan, New York State counties and localities would directly receive an estimated $370 million. Schumer today released a county by county report detailing the impact his plan would have on New York State counties. Schumer said today that he will lead the fight to make sure that millions of dollars are added on top of each county’s FMAP allocation.

 

·        Counties in the Capital Region expect to pay approximately $183.7 million for Medicaid services in 2009, with counties using an average of 52% of their property tax revenue to fund Medicaid obligations. A $100 billion increase in FMAP nationwide would provide the Capital Region with approximately $42.8 million in budget relief.

 

·        Counties in Central New York expect to pay approximately $189 million for Medicaid services in 2009, with counties using an average of 55% of their property tax revenue to fund Medicaid obligations. A $100 billion increase in FMAP nationwide would provide Central New York with approximately $44.1 million in budget relief.

 

·        Counties in the Hudson Valley expect to pay approximately $448.3 million for Medicaid services in 2009, with counties using an average of 48% of their property tax revenue to fund Medicaid obligations. A $100 billion increase in FMAP nationwide would provide the Hudson Valley with approximately $104.6 million in budget relief.

 

·        Counties in the North Country expect to pay approximately $101.4 million for Medicaid services in 2009, with counties using an average of 46% of their property tax revenue to fund Medicaid obligations. A $100 billion increase in FMAP nationwide would provide the North Country with approximately $23.7 million in budget relief.

 

·        Counties in the Rochester-Finger Lakes region expect to pay approximately $240.1 million for Medicaid services in 2009, with counties using an average of 39% of their property tax revenue to fund Medicaid obligations. A $100 billion increase in FMAP nationwide would provide the Rochester-Finger Lakes region with approximately $55.8 million in budget relief.

 

·        Counties in the Southern Tier expect to pay approximately $115.9 million for Medicaid services in 2009, with counties using an average of 56% of their property tax revenue to fund Medicaid obligations. A $100 billion increase in FMAP nationwide would provide the Southern Tier with approximately $27 million in budget relief.

 

·        Counties in Western New York expect to pay approximately $302.4 million for Medicaid services in 2009, with counties using an average of 52% of their property tax revenue to fund Medicaid obligations. A $100 billion increase in FMAP nationwide would provide Western New York with approximately $70.4 million in budget relief.

 

Schumer's legislative provision will ensure counties receive their fair share of the FMAP relief for their Medicaid programs. Without this provision, the entire increase in FMAP will go only to the state, providing no direct relief to the counties. Sending federal dollars directly to the counties will help stimulate local economies, creating jobs and financthe purchase of medical supplies and services that are greatly needed by Upstate New Yorkers. Numerous studies have estimated that federal Medicaid payments have a strong positive impact on state and local economies. Additionally, it will prevent already high property tax rates from skyrocketing even higher.

 

The New York State Association of Counties, which represents counties across Upstate New York, is highly supportive of the plan to bring millions of dollars to the county to help stave off rising property taxes: “The recent economic downturn has placed an enormous burden on local property taxpayers due to the increased demand for health and human services.  This additional federal Medicaid assistance will ensure that essential services continue and will provide timely property tax relief to residents across New York State.  County leaders commend Senator Schumer for his efforts on behalf of local property taxpayers, who pay nearly 80% higher local taxes above the national average,” said Stephen J. Acquario, Executive Director, NYS Association of Counties.

 

FMAP is a matching rate enacted in 1965 that determines the federal funding share for state Medicaid programs. The federal government matches state funds spent on Medicaid, based on the state’s FMAP. The FMAP varies from state to state; and New York’s FMAP is 50%. This means that for every dollar spent on Medicaid in New York, New York’s share of the cost is fifty cents (this fifty cents, in turn, is split between the State and Counties and localities), while the federal government chips in the other fifty cents. Thirteen states have FMAPs equal to the 50 percent in 2009 (CA, CO, CT, DE, MD, MA, MN, NV, NH, NJ, NY, VA, WY). By law, the FMAP cannot be lower than 50 percent or higher than 83 percent.  The FMAP formula is designed to account for income variation across the states and is based on rolling three-year average per capita income data for each state. The Department of Commerce's Bureau of Economic Analysis calculates FMAP annually.

 

In 2003, Congress approved a boost in FMAP for states during an economic downturn, of $10 billion in fiscal relief through a temporary FMAP increase of 2.95 percentage points for each state for five fiscal quarters. According to the Congressional Budget Office, more than half of the states reported that the 2003 increased matching rates enabled them either to avoid or delay making cuts or to make smaller cuts to their Medicaid program.

 

During an economic downturn, as state revenues become stagnant or decline, the number of Medicaid beneficiaries increases because of job losses and the health care coverage that comes with employment. Since all but one state have balanced budget requirements, according to Families USA, right now at least 43 states have faced or are facing budget deficits for the current 2009 fiscal year and or the coming 2010 fiscal year that, taken together, total $140 billion. In response to this extreme fiscal pressure, states are forced to dramatically cut budgets across the board.

 

As the second-largest item in most state budgets, Medicaid programs and their eligibility levels, benefits, and provider reimbursements are at risk for cuts during a recession. Though the FMAP money must be used to cover Medicaid costs, the significant savings to the overall state budget that result from an FMAP increase could be used for a variety of purposes that are not limited to Medicaid.

 

Medicaid covered more than 60 million Americans in 2007, including almost 30 million children. As the economy weakens, more people become uninsured and many turn to Medicaid for health coverage.


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