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"Federal Assistance for State Health Coverage in the Economic Stimulus Bill" by Robert Seifert

The Massachusetts unemployment rate reached 6.9 percent in December 2008, up from 5.0 percent in August and 4.3 percent the previous December. An Urban Institute study for the Kaiser Family Foundation found that each percentage point increase in the unemployment rate nationally leads to an increase of 1.1million uninsured and 1 million Medicaid enrollees. In Massachusetts, we can certainly expect that the loss of employer-based insurance that comes with layoffs will lead to increasing numbers eligible for MassHealth and Commonwealth Care. Indeed, if the Commonwealth is to maintain the high level of coverage that it has achieved since the enactment of Chapter 58, growth in these publicly subsidized programs is inevitable.

This, of course, costs money ¬– money that is scarce in the Commonwealth, as the Governor and Legislature wrestle with outsized budget deficits. But help may be coming from the federal government.

The American Recovery and Reinvestment Act, the economic stimulus package supported by President Obama and recently reported out by the House Appropriations Committee, contains a number of provisions that will help Massachusetts residents maintain health coverage, and help the States meet the increased demand for public programs. The bill includes:

• An increase of 4.9 percentage points in the federal matching rate for State Medicaid expenditures through the end of 2010. In Massachusetts, this means the federal share of spending for Medicaid and Commonwealth Care would increase from 50 to 54.9 percent, with a corresponding reduction in the State contribution. This provision alone would be worth $2.6 billion to Massachusetts.

• The bill offers states the option of extending Medicaid benefits to people who have been laid off and are receiving unemployment benefits or who have exhausted them; are receiving food stamps and are not otherwise eligible for Medicaid; or are in families with income below 200 percent of the federal poverty level. The federal government would pay the entire cost of Medicaid coverage for these populations through the end of 2010. Though Massachusetts already covers many people in these categories through MassHealth and the Medical Security Program, it would presumably be able to take advantage of the enhanced federal contribution to extend coverage to additional people who meet the bill’s criteria.

• The bill also provides assistance with COBRA coverage to people leaving jobs: a 65 percent premium subsidy for up to 12 months after becoming involuntarily unemployed, and continuing eligibility for COBRA coverage to workers age 55 and over, until they become eligible for Medicare or secure new employer-sponsored coverage.

The bill still has to work its way through Congress, and is encountering some opposition. Though the details may change, the intent is well-founded: that the federal government help states make Medicaid function as it is supposed to – as public support to people in need, the importance of which grows when economic fortunes decline.

Robert Seifert is a Senior Associate in the Center for Health Law and Economics, UMass Medical School

This program aired on January 27, 2009. The audio for this program is not available.

Martha Bebinger Twitter Reporter
Martha Bebinger covers health care and other general assignments for WBUR.

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