ENGEL MEETS WITH NYS LEADERS REGARDING FMAP INCREASE AND STIMULUS PACKAGE

Thursday November 20, 2008 Jeremy Tomasulo
REP. ENGEL MEETS WITH NYS LEADERS REGARDING FMAP INCREASE AND STIMULUS PACKAGE

Federal Medical Assistance Percentage Must Rise to Avoid Costly Cuts

Washington, D.C.--Congressman Eliot Engel joined his colleagues in the New York Congressional Delegation in meeting with Governor David Paterson, Assembly Speaker Sheldon Silver, State Senator Malcolm Smith and other leaders from around New York State regarding support of a stimulus package that includes increased Medicaid assistance for the states.

Rep. Engel, joined by Congressman Peter King (R-NY), sent a letter in September 2008 to Congressional leadership urging the passage of a stimulus package with increased FMAP (Federal Medical Assistance Percentage) for states.  In October, the House passed a $61 billion stimulus plan of public works spending, unemployment benefits, Medicaid help and food stamp assistance for states. A similar package will likely be presented in 2009 with a provision to temporarily increase the matching funds for each state.  Rep. Engel is committed to pursuing such a package when the new 111th Congress – this time with better support from the Senate and support from President-elect Obama.  

The Federal government pays a share of the medical assistance expenditures under each State's Medicaid program. That share, known as the Federal Medical Assistance Percentage (FMAP), is determined annually by a formula that compares the State's average per capita income level with the national income average. States with a higher per capita income level are reimbursed a smaller share of their costs. By law, the FMAP cannot be lower than 50 percent, or higher than 83 percent.  New York’s share for Fiscal Year 2009 is 50 percent – meaning for every dollar New York spends, the federal government also spends a dollar.

“New York State is in the midst of such a fiscal crisis that it may be forced to make cuts that will eliminate or reduce health care services for low-income children and their families.  Sadly, New York is not alone and tens of millions of children, seniors and people with disabilities may find themselves with reduced or eliminated heath care in the very near future,” said Rep. Engel.  “As the ranks of the uninsured rises, the pressure on providers increases.  Cuts in state programs will only lead to increased strain on hospital budgets, larger burdens on private insurance and to skyrocketing premiums.”

According to the American Hospital Association, at least 29 states and the District of Columbia expect to face shortfalls of close to $48 billion in the next fiscal year. Unlike the federal government, most states cannot run a budget deficit.  States are therefore forced to reduce spending or eliminate programs to address these budget shortfalls.  Such shortfalls tend to grow worse over time and have lasting effects leaving important programs at risk over time. Many of these cuts can be minimized or averted if Congress acts to bring fiscal relief to the states.  Such a short term increase helped bolster state economies back in 2003 and protected the health care for millions of people in need.

New York State current has approximately a $1.5 billion deficit and Governor Paterson has proposed a two-year, $5.2 billion deficit reduction plan to account for the expected expansion of the deficit in the near future.

“States and cities are hurting because of the economic downturn our country, indeed the whole world, is facing,” Rep. Engel said.  “A stimulus package would help the people of New York as well as the economy as a whole.  We must act to help our states and in the process rescue our citizens from a potential future may result in devastating consequences.  Leadership is required from both state and federal representatives to see our people through these trying economic times with as little impact as possible.  Passing this stimulus package and bolstering FMAP is a perfect way to do just that.”

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