Federal Health Reform Provides Critical Long-Term Help to States

Residents and governments of the 50 states and the District of Columbia will receive $849 billion in new federal funding for health coverage over the next decade under proposed federal health reform legislation.

This surge of new federal support includes $460 billion to help families purchase private health insurance coverage and $389 billion for state Medicaid programs. In return, states will be required to provide a modest match for the new federal dollars. Experts estimate the state match will be 3.1 percent of the new federal funds, a fraction of the customary rate.

Separately, under the American Recovery and Reinvestment Act of 2009 and the pending jobs bill, the federal government is financing an immediate and substantial reduction in state Medicaid spending. Experts estimate the combined impact of enacting comprehensive reform, passing the pending jobs bill and completing implementation of the Recovery Act would be a net reduction in state Medicaid spending of $85 billion over the 2009 to 2019 period.

Passage of comprehensive health reform, as well as enactment of immediate relief through higher federal FMAP rates, would provide an enormous financial boost to state governments. These actions will relieve states of significant budgetary pressures while addressing the rising health care needs of American families.