Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2004-Continued

DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND RELATED AGENCIES APPROPRIATIONS ACT, 2004—CONTINUED

Mrs. FEINSTEIN. Madam President, I plan to offer an amendment to the fiscal year 2004 Labor-HHS appropriations bill that seeks to offer States an alternative Medicaid FMAP formula while allowing States to remain in the current formula structure if they choose. This amendment is vital to providing some relief to States who have been shortchanged by hundreds of millions of dollars under the current FMAP formula for the cost of providing Medicaid services. The amendment will not penalize any State who wishes to remain under the current formula. It simply allows States to opt into a new formula that better reflects States' need. This new FMAP is only for Medicaid expenditures in excess of fiscal year 2003 Medicaid expenditure levels.

For States who opt to go with the new formula, per capita income is replaced with a ratio of the most recent 3-year averages of total taxable resources, TTR, as determined by the U.S. Department of the Treasury, and persons below the poverty level. The multiplier is also lowered from 0.45, used in the current FMAP formula, to 0.40. For the period 2004-2013, the new formula has a maximum increase of one percentage point per fiscal year above the current FMAP formula for the prior year. Once a State opts to go with the new formula, they will not be able to switch back to the current FMAP formula. However, they will be held harmless at the FMAP rate they would have gotten under the current formula, prior to the Jobs and Growth Tax Relief Reconciliation Act of 2003, for the current year. States opting for the new formula will have Medicaid expenditures, up to the fiscal 2003 levels, matched at the current FMAP formula and with expenditures above the fiscal 2003 levels matched at the new formula FMAP.

In a study released in July 2003, GAO found that the formula used to calculate the portion of each State's Medicaid expenditures that the Federal Government will pay—the FMAP—often widens the gap between individual States and the national average. Under the current formula, 21 States move farther from the average State's funding ability after the Federal match is added. In fact, 4 of the 21 States—California, Florida, Hawaii, and New York—have below-average funding ability before Federal matching is added and move farther below the average after Federal matching aid is added.

Since Medicaid was enacted in 1965, the Federal match rate has been determined by a State's per capital income. In its study, GAO found that per capita income is a poor proxy for determining both State resources and the low-income population. The Feinstein amendment will give States the option to choose a formula that is based on a combination of the State's total taxable resources and population below the poverty level.