Did somebody say something about special session?

Today’s news is full of speculation about whether our Legislature will have to meet for special session given the failure thus far of Congress to extend $480 million in federal funding for our state’s Medicaid program.

Federal Medical Assistance Percentages, or FMAP funding, are the federal matching dollars states receive to help offset costs for providing Medicaid, State Children’s Health Insurance Program (SCHIP) services, and a few other services for low-income families.

When legislators approved the 2010 Supplemental Operating Budget, they booked about $480 million in FMAP funding after assurances from our U.S. Senators and some members of our Congressional delegation that Congress was poised to approve the funding. The funding would come from a six-month extension of an increase in FMAP money that had been part of the American Recovery and Reinvestment Action of 2009. Thirty states approved budgets with the FMAP funding included.

Unfortunately, the U.S. House did not include the FMAP funding in the “extenders bill” they recently passed. For Washington and the other 29 states that included the FMAP funding in their budgets, that means a possible loss of health services for hundreds of thousands of low-income and elderly citizens.

What this does not mean is imminent special session. The enhanced FMAP match will definitely continue through December 2010 so we have some time. The U.S. Senate is expected to take up the bill once they return from recess on June 7th and members of our Legislature, as well as our Governor and leaders from other states, are meeting with Congressional leaders to stress the importance of approving the extension.

But what will happen if we don’t receive the FMAP money? Medicaid spending accounts for about 20% of our state-fund budget, so a loss of $480 million in federal matching funds would result in substantial reductions to the amount of services we can provide. Our options for those reductions are very limited.

Under the federal health care reform signed by President Obama, states must maintain current eligibility of both Medicaid and SCHIP. While we wouldn’t want to reduce that eligibility anyway, it isn’t even an option under the new law. Reducing Medicaid provider rates is also an unlikely option considering recent decisions by the Ninth Circuit Court of Appeals to overturn recent provider rate reductions in California and Washington.

Thus, we would be left with only one realistic option for significantly reducing our Medicaid spending in such a short time frame – the elimination of optional services. Those include dental care, vision services, hearing aids, hospice, podiatry and other essential health services for adults. Home and community-based long term care services would also be at risk. These cuts would disproportionately impact elderly and disabled Medicaid clients.

So yes, legislators are going to keep pushing for the FMAP funding, but no, they won’t be convening in Olympia any time soon for special session.