King, Pallone, Dingell Aid States in Medicaid Payments
Introduce Legislation to Offset Cost Increase and Prevent Service Cuts

February 8, 2008

For Immediate Release                                    
Contact Carol Danko
202-225-7896

WASHINGTON, DC – Reps. Peter King (R-Seaford), Frank Pallone (D-NJ), John Dingell (D-MI), and Tom Reynolds (R-NY) introduced legislation yesterday to ensure that Medicaid services will not be affected by budget cuts and the rising cost of healthcare. The bill raises the federal government’s contribution to states by 2.95%, which will provide New York State with approximately $1 billion for Medicaid.

 “State budgets have become much tighter, making program cuts inevitable,” said King. “This bill provides relief to states, so that they will not have to cut healthcare for our nation’s most vulnerable citizens.”

In general, Medicaid is funded by a combination of state and federal funds, yet New York is one of a few states to also require a local share. The federal government’s share of Medicaid payments is called the Federal Medical Assistance Percentage (FMAP). This percentage varies from 50% to 77%, with poorer states receiving a higher FMAP.  The Pallone-King bill raises the FMAP to alleviate the payment burden on states, and includes a provision to ensure that additional funds flow down to the local governments in New York.

“It is essential that New York has the appropriate amount of funds to adequately provide for its neediest members of society,” said King. “The FMAP increase will ensure that New York continues to receive adequate Medicaid funding.”

Medicaid spending has been on the rise due to an increase in eligible families and the rising cost of healthcare. In addition, state and local governments are faced with budget gaps and the federal government has proposed deeper cuts for 2009. In 2003, states faced similar burdens in meeting the population’s Medicaid needs. A 2.95% increase in FMAP provided the assistance states needed in order to avoid cutting their Medicaid rolls. The Pallone-King bill is modeled after the last FMAP increase, and is expected to provide much-needed relief.

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