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Schumer to Lead Push to Have Economic Stimulus Plan Bring Direct Aid to NYS Counties & Localities As Part of $100 Billion Boost in Fed Medicaid Money

With NYC Paying Share of Total Medicaid Costs, City May Have to Pony Up Shocking $2 Billion for Medicaid Next Year

Schumer: Since NYC is Forced to Pay For Medicaid Should Get Their Fair Share of Medicaid Relief - Top Priority for Mayor Bloomberg

With New York City and localities across New York State facing historic budget deficits, U.S. Senator Charles E. Schumer today announced he will push to ensure that billions in direct fiscal aid is sent to local governments, including New York City, as part of the new economic stimulus package. Schumer will fight to ensure a “local-share provision” is included as part of the expected $100 billion boost in Federal Medical Assistance Percentage (`FMAP) meant to help states and localities close debilitating budget gaps. Under Schumer’s plan, New York City would be in line for a $1.12 billion increase in its local share of FMAP. Schumer will say that because counties and localities in New York State are forced to pay for Medicaid, they should get their fair share of Medicaid relief. Mayor Bloomberg has indicated that including a local-share provision is a top priority.


“There are no two-ways about it, New York City cannot be left out in the cold by the federal government,” Schumer said. “New York City is overburdened by Medicaid costs and they should get their fare share of relief in the economic stimulus plan. My plan would bring more than $1 billion directly to the City to help us get through these very tough economic times.”


The economic downturn has strained county and family budgets alike. Localities across New York State faced with huge budget gaps 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’ ability to meet rising Medicaid program costs as enrollment spikes during economic hard times. Earlier this month, Governor David Paterson released a budget aimed at closing the more than $14 billion state budget deficit that included a one percent increase in Medicaid spending but a significant cut for hospitals, nursing homes and other health care providers. Governor Paterson’s budget assumed no increases in federal aid to states this year.

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 Committee which 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 as part of the economic stimulus plan.


Schumer has called for a $100 billion boost for FMAP in the economic stimulus plan nationwide. Schumer’s plan would ensure that New York State counties received a share of this aid. With the local share provision included, New York City would receive $1.127 billion in direct aid. This aid would ease pressure on the entire budget, not just Medicaid.


Schumer’s legislative provision will ensure New York City receive its fair share of the FMAP relief for their Medicaid programs. This relief to the city will help create jobs and finance the purchase of medical supplies and services that are greatly needed by New York City hospitals. Numerous studies have estimated that federal Medicaid payments have a strong positive impact on state and local economies. Schumer has spoken with Governor David Paterson, who said that he supports increased relief for New York and all counties.


As the second-largest item in most state and local 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.


The New York State Association of Counties, which represents counties across New York, is 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%. Thirteen states have FMAPs equal to the 50 percent floor 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.


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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