A new analysis of the American Recovery and Reinvestment Act by the Center on Budget and Policy Priorities indicates that Minnesota can expect to receive approximately $2 billion in increased Medicaid matching funds from the federal government from October 1, 2008 through December 31, 2010.
Three key features of the bill relating to Medicaid include:
- A “hold harmless” provision ensures that any state whose base Medicaid matching rate, or FMAP, is scheduled to decrease in 2009 or 2010 would remain at the highest rate. The base rate varies by state depending on economic circumstances, ranging from 50% to a high of 75.84%;
- Minnesota and all other states will have 6.2% added to their base FMAP. In our state, where the federal government pays 50% of Medicaid costs, the base federal share of assistance will increase to 56.2% during the period from October 1, 2008 through December 31, 2010;
- States experiencing worsening economic conditions as indicated by a significant increase in their unemployment rates would receive an additional increase in FMAP. State economic conditions will be reviewed on a quarterly basis. Once a state qualifies for an additional increase, the higher FMAP would remain in place through at least July 1, 2010, even if unemployment conditions in the state improve.
Most importantly, to receive any increased FMAP, Minnesota’s Medicaid eligibility levels must not be made more restrictive than they were on July 1, 2008.
The Center’s analysis, based on estimates by the Government Accountability Office, indicates that Minnesota would receive $620 million in the current state fiscal year (FY) 2009, $940 million in FY 2010 and $480 million in FY 2011 for a grand total of $2 billion. While these additional federal funds will be helpful as the state struggles to close large and growing projected budget shortfalls, they do not solve the state’s fiscal problems. They will, however, go a long way to help ensure that thousands of low-income Minnesotans receiving health care through Medicaid will not be kicked off the rolls because of the state’s budget shortfall.