Last week the Senate passed what is loosely termed a "jobs" bill that included a $16 billion appropriation to extend the ehanced Medicaid match created via the ARRA (Stimulus bill) to June 30, 2011. Without the extension of funding, states are facing a loss of the additional Medicaid matching dollars on December 31. Upon passage by the Senate, Speaker Nancy Pelosi called the House back into special session to take up the measure. The House was/is on recess through August.

The impetus behind a quick move on the part of the Speaker to reconvene the House membership is the $10 billion appropriation primarily for state education budgets. The funding is targeted, according to the Administration and House and Senate Democrats, at saving 130,000 public school teaching positions. At one point, Congress had priced the cost of saving these positions as $23 billion but that amount was unpalatable in the Senate, hence the re-pricing to $10 billion. The FMAP provision sits along side making the total price tag of the bill $26 billion.

In order for the bill to pass the Senate in its slimmed-down version, Senate Majority Leader Harry Reid was forced to offset the price tag with a combination of cost savings and tax hikes. Mr. Reid thus crafted the version to include cuts in food stamp funding and increases on certain multi-national companies that headquarter in the U.S. The resulting "budget neutrality" of the final Senate bill created just enough migration of Republicans, primarily opposed to the bill, to join Democrats in support.

Even in spite of a large margin of apparent Democrat votes in favor of the bill in the House, passage is not a locked-dead certainty. Oddly enough, the funding for FMAP continuation, even with its larger price tag, is not among the issues that could derail the bill. Below, I've provided a quick summary of issues that could cause the bill to stall in the House or alternatively, be re-crafted and thus, set for conference.

• The entirety of the membership of the House faces re-election in November, unlike the Senate where only a third of the members are up for re-election. There are a sufficient number of House incumbents in very contested races to change the balance of the power, shifting the majority to Republicans. A very key issue in re-election battles this fall is the cost of "bail-outs" or alternatively, continued spending to maintain government jobs. In short, the issue of doubling-down on taxes; jobs that are already funded by one level of taxation (primarily local or state) that are being supported again with another level of taxation (federal). As long as this issue or the concern over federal spending and bail-outs persists at the level present, politicians including Democrats and Republicans, will remain cautious about their votes on legislation such as the "jobs bill" now before the House.
• The $10 billion allocation to fund public school teaching positions is questionable in terms of its real impact. It is a one-time infusion and many governors are stating that the funds are either unwanted or too minimal to have any long-term impact on their state budgets. In some states, simple changes to existing teacher's contracts such as a modest cost-chare in employee benefit costs would amount to more job retention impact across a longer horizon. The issue that is being brought forth by the bill's adversaries is that the education funding appears to be payola to the teacher's union or a bail-out of positions that provides no positive economic impact (jobs that aren't really at risk and funding that won't go to new positions).
• The funding is one-time and as a result, doesn't change the fortunes of any state budget to any measurable extent. The reality is that 48 out of 50 states have moderate to significant budget deficits (California by far the worse) that only an improved overall economy can fix. Unless Congress is willing to commit to longer-term and more significant funding, the $26 billion only delays what will still be, significant financial decisions including cuts and where available, tax increases.

As important as continued FMAP enhancement is for the long-term care industry in the short-run, the real issue of importance is the need for reform of the disfunctional and ineffective Medicaid sytem. Even with passage of the current appropriation, the structual Medicaid deficits state to state continue to loom, just in this case, moved to June 30, 2011 rather than December 31, 2010. The probability of a reinvigorated economy growing sufficiently fast enough by early 2011 to change state budget fortunes positively is slim and none. What this means for providers is that come December, renewed lobbying efforts for additional extensions of money that the federal government truly does not have, will heat-up again. Sooner or later (likely sooner), the industry will need to re-position and realize that the current methodology for funding long-term care under Medicaid is simply unsustainable.