[Congressional Record Volume 148, Number 68 (Thursday, May 23, 2002)]
[Senate]
[Pages S4863-S4864]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS (for herself, Mr. Nelson of Nebraska, Mr. 
        Hutchinson, Mrs. Lincoln, Mr. Smith of Oregon, and Mrs. 
        Clinton):
  S. 2570. A bill to temporarily increase the Federal medical 
assistance percentage for the medicaid program, and for other purposes; 
to the Committee on Finance.
  Ms. COLLINS. Mr. President, I rise today with my good friend, Senator 
Ben Nelson, to introduce a bill that would assist States through a 
period when most are experiencing fiscal crises. I am particularly 
pleased to team with Senator Nelson on this effort, as we have teamed 
on so many efforts in the past, because he has such a solid grasp of 
the fiscal issues now facing our States, and the ways we can most 
effectively help.
  We are pleased to be joined today by Senators Hutchinson, Lincoln, 
Clinton and Gordon Smith, making this, truly, a bipartisan effort.
  The recession may have ended earlier this year, but its effects 
linger, and they are being felt acutely by States from Maine to 
Nebraska, from New York to California. Though the recession has ended 
and economic growth picked up in the first quarter of the year, 
unemployment continues to rise, and now, standing at 6 percent, the 
U.S. unemployment rate is at an eight-year high.
  The recession, the resulting rise in unemployment, and the tragic 
events of September 11 have placed tremendous demands on government 
services and resources. At the same time, these factors have 
contributed to a dramatic and unexpected decrease in government 
revenues, at precisely the time when more revenues are needed to 
respond to the confluence of challenges that confront us.
  The result of increasing demands for services and resources and 
declining revenues is that States across the Nation are in crisis. The 
National Governors Association and National Association of State Budget 
Officers this month found that over 40 States are facing an aggregate 
budget shortfall of between $40 and $50 billion. Most States have seen 
their estimates of tax collections for the current year decrease, often 
dramatically. And while State governments are scrambling to respond, 
they are constrained in their ability to do so by one key factor, they 
cannot run deficits. Forty-nine States are required by law or 
constitution to balance their budgets.
  As a result, thirty-nine States have been forced to reduce their 
already-enacted budgets for fiscal year 2002 by cutting programs 
across-the-board, tapping rainy day funds, laying off employees, and 
implementing a variety of other cost-cutting measures. According to a 
National Conference of State Legislators report in April, States have 
been forced to cut a number of critical programs. Twenty-nine States 
have attempted to balance their budgets by cutting spending on higher 
education. Twenty-five States have cut corrections programs. Twenty-two 
have cut Medicaid. Seventeen States have cut K-12 education. And ten 
States have reduced aid to local governments. In addition, a number of 
States have raised taxes and fees by a total of $2.4 billion in 2003.
  We believe that the Federal Government can and should help States, 
and that it should do so in a responsible way. Therefore, today we are 
introducing legislation that would provide a temporary increase in the 
Federal Medicaid matching rate. It would increase the Federal 
Government's share of each State's Medicaid costs by 1.0 percent and 
hold the Federal matching rate for each State harmless for the 
remainder of this fiscal year and next. In addition, the bill includes 
a temporary block grant to States that would help them pay for the 
rising demand in social services resulting from the economic downturn. 
Our bill would provide approximately $8.9 billion in total fiscal 
relief to States which would allow them to expand, not contract, 
Medicaid and other health and social services.
  Our approach to fiscal relief has been endorsed by the National 
Governors Association, which supports our bill because it represents a 
sound and reasonable, bipartisan approach to State fiscal relief, and 
one that could be enacted expeditiously. It is also endorsed by the 
American Hospital Association,

[[Page S4864]]

which understands the importance of providing assistance to States at a 
time when many are looking toward health programs to help balance their 
budgets.

  Our bill targets most of its assistance on Medicaid, which is the 
fastest growing component of State budgets. While State revenues were 
stagnant or declined in many states last year, Medicaid costs increased 
11 percent. This year, Medicaid costs are increasing at an even greater 
rate, 13.4 percent. My home State of Maine is only one of a number of 
States that has been forced to consider cuts in their Medicaid programs 
to make up for their budget shortfalls.
  Earlier this year, Maine was facing a $248 million revenue shortfall. 
Faced with nothing but tough choices, our Governor proposed $58 million 
in Medicaid cuts, including reductions in payments to hospitals, 
nursing homes, group homes, and physicians. He was also forced to 
propose a delay in the enactment of legislation passed by the State 
Legislature last year to expand Medicaid to provide health coverage to 
an estimated 16,000 low-income uninsured Mainers.
  While subsequent revisions in the State's revenue forecasts enabled 
the Governor to restore most of these Medicaid cuts, the respite was 
only temporary. Earlier this month, Maine's budget estimators 
determined that the State's revenues would come in some $90 million 
under budget this year, and would experience another $90 million 
shortfall in the year to come. Suddenly, the State again must consider 
cutting critical programs and raising taxes. This is no small matter 
as, by some measures, Maine already imposes the highest tax burden in 
the Nation on its residents.
  The legislation we are introducing today will help to bridge Maine's 
funding gap by bringing an additional $56 million to my State's 
Medicaid and social services programs over the next eighteen months 
These funds would help forestall the need for any further cuts, and, 
hopefully, allow Maine to proceed with its plans to expand its Medicaid 
program to provide health care coverage for more of our low-income 
uninsured.
  The order facing Governor King in Maine and other governors across 
the country is a tall one indeed. The decisions they may be forced to 
make could affect the access of millions of Americans to health care 
and social services. I think we need to help, and the bill Senator 
Nelson and I introduce today does precisely that. We urge our 
colleagues to join us in this effort.
  Mr. NELSON of Nebraska. Mr. President, today I introduce, with my 
good friend Senator Susan Collins, a new proposal to provide temporary 
fiscal relief to the states to help them address their severe budget 
crises.
  A few months ago, this body passed and the President signed into law, 
a bill to stimulate the economy and help workers. It was not a perfect 
bill, but few are. But the economy was hurting and it was time to act. 
However, there were unintended consequences of that bill. Not only did 
the economic stimulus bill fail to provide State fiscal relief, but by 
making some changes to federal tax law, the bill unintentionally added 
to revenue shortfalls that most States are experiencing. This, in turn, 
has put programs such as medical assistance to the most vulnerable 
individuals in this country at risk.
  While the national economy is recovering from the recession, States' 
budgets will take another 12-18 months to recover. The National 
Governors Association and National Association of State Budget Officers 
this month found that over 40 States are facing an aggregate budget 
shortfall of $40 to $50 billion. Thirty-eight States have seen their 
revenues fall below previous estimates, some by dramatic amounts.
  Every State but one has to balance its budget, even in the midst of a 
recession. As a result, 41 States have been forced to reduce their 
fiscal 2002 enacted budgets by cutting programs across-the-board, 
tapping rainy day funds, laying off employees, and employing a variety 
of other cost-cutting measures. Some States have even had to raise 
taxes.
  According to the National Governors Association, Medicaid spending 
has been a particular struggle for States, since expenditures have 
risen by an average of 12 percent over the last 2 years, while State 
revenues rose a total of 5 percent. Medicaid spending has been driven 
higher by increases in health care costs nationwide, particularly the 
costs of prescription drugs, which has increased by 18 percent annually 
over the past 3 years, and by recession-related increases in the number 
of people eligible for Medicaid.
  States' Medicaid budget problems are exacerbated by scheduled 
reductions in Federal Medicaid payments to States. Between fiscal years 
2001 and 2002, 29 States had their Medicaid matching rates drop and 17 
States will have matching rate reductions between fiscal years 2002 and 
2003.
  To date, most States have been able to reduce Medicaid spending 
without cutting back eligibility significantly. As fiscal pressures 
mount, however, many States are likely to consider substantial 
reductions in eligibility that could leave hundreds of thousands more 
children, families, people with disabilities, and seniors uninsured.
  In other words, States have largely exhausted the usual ways of 
balancing their budgets. Given the projection of continued deficits, 
this means States will have to continue to reduce critical spending for 
health care, social services as well as other important priorities such 
as education. Most States' fiscal year begins in July, underscoring the 
need for the Congress to act expeditiously on this critical matter.

  Our proposal would provide a temporary 1.0-percent increase in the 
federal Medicaid matching rate. In addition, we hold the Federal 
matching rate for each State harmless for the remainder of this fiscal 
year and next. the bill also includes a temporary block grant to States 
that would help them pay for the rising demand in social services 
resulting from the economic downturn. Our bill would provide 
approximately $8.9 billion in total fiscal relief to States which would 
allow them to expand, not contract, Medicaid and other health and 
social services.
  The National Governors Association has endorsed our approach to 
fiscal relief because it represents a sound and reasonable, bipartisan 
approach to State fiscal relief, one that could be enacted 
expeditiously. Our bill blends several fiscal relief approaches 
previously supported in the Senate and in the House. As such, I believe 
this proposal can gain the widespread bipartisan support necessary to 
move forward.
  I urge my colleagues to join Senator Collins and me in this effort 
and show the States that Congress is not indifferent to their budget 
problems and that we will step in and provide meaningful assistance at 
a time when governors need it most.
  Mr. HUTCHINSON. Mr. President, I am pleased to join Senator Collins 
and Senator Nelson in introducing legislation today that will provide a 
temporary increase in the Federal Medicaid matching rate through fiscal 
year 2003.
  The National Governors Association and National Association of State 
Budget Officers recently reported that over 40 states are facing an 
aggregate shortfall of $40 to $50 billion. One of the primary reasons 
for these shortfalls is the rising cost of health care. Medicaid costs, 
which increased by 11 percent last year, are the fastest growing 
component of State budgets.
  Our legislation is critical to addressing these State budget 
deficits, especially in Arkansas, where a $12.8 million Medicaid 
shortfall was announced last November. Specifically, our bill would 
increase the Federal Government's share of each State's Medicaid costs 
by 1.0 percent and hold harmless the Federal matching rate for each 
state for the remainder of this fiscal year and next. Additionally, a 
temporary block grant program would be established in order to help 
meet the rising demand for social services resulting from the recent 
economic downturn.
  In total, this legislation will provide $8.9 billion in relief to 
States for the provision of Medicaid and social services. For Arkansas, 
this legislation will provide $71 million in relief over the next two 
years. Endorsed by the National Governors Association, this bipartisan 
legislation is worthy of Senate support, and I urge my colleagues to 
become cosponsors.
                                 ______