Press Releases

Washington, D.C. The Children's Defense Fund (CDF) calls on Congress to take action now in order to preserve federal Medicaid funding that is critically important for states. According to a CDF® report of each state's estimated loss, Congress must act by June 30, 2004, when 36 states will each lose at least $100 million in federal Medicaid funding. CDF estimates that the reduction in potential federal funding would range from $10 million in Wyoming to more than $1 billion in California and New York.

Last year Congress, recognizing that states are experiencing the worst budget crisis in 50 years, provided relief by increasing the federal share of Medicaid spending (also called the federal Medicaid match rate). States used the additional federal funding to minimize cuts they would otherwise have made in Medicaid coverage and benefits. This relief is slated to expire at the end of June.

However, many states are still caught in a budget squeeze. Two-thirds of states are facing budget gaps for the next fiscal year that total $36 billion. While the increase in the federal match rate helped states avoid some Medicaid cuts, virtually all states still had to reduce Medicaid services last year. Many states are preparing to make even deeper cuts to Medicaid health services for poor and disabled Americans this year, in part because they expect that the federal match rate will drop on June 30, just as the new state fiscal year begins.

"Congress has until the end of this month to preserve a financial lifeline to states still struggling to keep their heads above water," said Emil Parker, the Director of CDF's Health Division. "The pressure on states to balance their budgets often forces them to slash vital public services in areas such as health care that disproportionately affect the lives of lower-income Americans. Congress must act now to alleviate that pressure by continuing the enhanced federal match rate for another year. The extension would protect vulnerable Medicaid beneficiaries?especially children, the elderly, and the disabled?from cuts in coverage and benefits."

The CDF report provides state-by-state estimates of the impact of the drop in the federal Medicaid match rate, calculated using Medicaid spending levels from proposed state budgets for fiscal year 2005.

# # #

Full Report:

• Decline in the Federal Medicaid Match Rate Will Hit States Hard 36 States Will Lose at Least $100 Million
  July 16, 2004 (Adobe PDF : 8 pages : 225 KB)

# # #

The mission of the Children's Defense Fund is to Leave No Child Behind and to ensure every child a Healthy Start, a Head Start, a Fair Start, a Safe Start, and a Moral Start in life and successful passage to adulthood with the help of caring families and communities. CDF provides a strong, effective voice for all the children of America who cannot vote, lobby, or speak for themselves. We pay particular attention to the needs of poor and minority children and those with disabilities. CDF educates the nation about the needs of children and encourages preventive investment before they get sick, into trouble, drop out of school, or suffer family breakdown. CDF began in 1973 and is a private, nonprofit organization supported by foundation and corporate grants and individual donations. We have never taken government funds.