Pallone Statement at Health Hearing on Increased Federal Support for Medicaid

Washington, D.C. --- U.S. Rep. Frank Pallone, Jr. (D-NJ), Chairman of the House Energy and Commerce Subcommittee on Health, gave the following opening statement this afternoon at a subcommittee hearing entitled "State Fiscal Relief: Protecting Health Coverage in an Economic Downturn."

"Good morning. We are here today to examine the issue of State Fiscal Relief and Protecting Health Coverage in an Economic Downturn. Since we do not have votes until this evening, I appreciate the concerted effort members made to be here for this important hearing.

"Medicaid provides over 61 million Americans with access to medical care and specialized supports and services. It protects our most vulnerable populations: our poor and our disabled.

"Unfortunately, due to converging economic factors and growing fiscal pressures, the Medicaid programs in many states are experiencing funding shortfalls and millions of American citizens are in danger of losing access to the health care coverage they desperately need. Already 13 states, including my home state of New Jersey, have considered or implemented changes to their Medicaid program that affect eligibility criteria.

"These cuts not only affect those already on Medicaid but also those who will come to need it as the economy continues to decline. For six straight months this year the economy has lost more jobs than it has created---resulting in 428,000 jobs being lost so far in 2008.

"As unemployment rates increase, more Americans lose their employer-sponsored health care coverage and turn to Medicaid for their health care needs. A study conducted by the Kaiser Family Foundation found that increasing the national unemployment rate by one percentage point increases Medicaid and SCHIP enrollment by 1 million. Such a change would increase state spending by approximately $1.4 billion at a time when states are already struggling to balance their budgets. This would be devastating.

"Adding insult to injury, cuts to state Medicaid programs not only impact Medicaid eligible individuals but they also adversely affect the health care job market. Medicaid cuts translate into health care job losses. Therefore, such cuts only contribute to a state’s unemployment rate and can exacerbate a worsening fiscal crisis.

"Congress must ensure that Medicaid remains the safety net that protects hardworking American families who are negatively impacted by the economic downturn.

"Earlier this year, I introduced a bill with my colleagues Chairman Dingell, Mr. King and Mr. Reynolds to temporarily increase each state’s Federal Medical Assistance Percentage (FMAP) during this economic downturn to ensure that states can continue to provide critical services, instead of cutting them.

"Our legislation provides a temporary FMAP increase of 2.95 percentage points with the condition that states do not change eligibility criteria. It also includes a hold-harmless provision that prevents any cuts from going into effect for states that are currently slated to see a decline in federal contributions. In addition, the legislation provides a temporary increase of the Medicaid FMAP by 5.9 percent to the territories.

"This bill is very similar to a provision included in an economic stimulus package passed by a Republican Congress and signed into law by President Bush in 2003. The FMAP increase we provided in 2003 was a success. Studies have shown that the temporary increase provided the necessary funding to avert or limit cuts to the Medicaid program. Our action also prevented any provider payment cuts from being implemented, and reversed any cuts that states had already enacted.

"I believe it is once again the responsibility of Congress to ensure that Medicaid, a vital public health safety net, is protected. Medicaid is a joint federal and state effort. The federal government needs to do its part to protect the 61 million Americans who already rely on Medicaid to get their health care services, as well as the millions more who will need these services during this economic downturn. Temporarily increasing the federal matching payments in Medicaid is a proven strategy for stimulating the economy.

"I would like to thank each of our witnesses for being here today to talk about the current fiscal situation states are facing and I especially would like to welcome Heather Howard, the Commissioner of the New Jersey Department of Health and Senior Services. I look forward to hearing your testimony today and now recognize Mr. Deal for his opening statement."