It Pays to Assume You're Not Getting Paid

Some states are waiting with bated breath to see if Congress denies a federal boost in Medicaid spending. But few places are resting easy, since they never assumed they'd get the money in the first place.
by | June 16, 2010
 

If the bailout-weary Congress decides not to extend federal Medicaid funds to states, legislatures across the country will be forced to tear up budgets they thought had been finalized.

But a small handful of places aren't as worried -- because they never assumed they'd actually get that money in the first place.

One of those states is Minnesota, where lawmakers this year decided to treat their $408 million in expected federal funds as a bonus, rather than a given. "It was a good move on all of our parts," Minnesota Management and Budget commissioner Tom Hanson told the Twin Cities Pioneer Press.

About 30 states are counting on the money, and most will face some serious problems if it fails to come through. From the Press:

Without the money, Arizona officials proposed canceling a health care program for children and coverage for more than 300,000 poor adults. In Pennsylvania, Gov. Ed Rendell warned that 20,000 government employees would be laid off. California — already buffeted by ominous budget shortfalls — would face another $1.5 billion in cuts. In New York, $1.1 billion. In Illinois, $730 million.

But Minnesota's lawmakers and budget experts can enjoy the summer off:

In hindsight, the move looks prescient. Lawmakers don't have to worry about potentially convening a special session to make yet another round of tough and politically trying budget cuts as election season approaches. And they aren't faced with the choices other states are considering. [...]

The debate over Minnesota's $408 million in added Medicaid money was at the forefront of monthslong budget maneuvers between Gov. Tim Pawlenty's administration and the DFL-controlled Legislature and even drifted into presidential politics.

The added payments first began under the stimulus plan. [...]

But as the end of the 2010 legislative session drew near, concern over the money grew. And when the rubber hit the road, Pawlenty and lawmakers on both sides of the aisle decided not to include it. Instead, the additional money would bolster state revenues rather than being designated for health care costs.

"Nobody wanted to count on it and then not have it happen," Hanson said.

Sounds awfully smart to me.

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