Governors ask Obama for flexibility on Medicaid

Governors met with President Obama about the "fiscal cliff" on Dec. 4, 2012. From left to right: Oklahoma Gov. Mary Fallin, Minnesota Gov. Mark Dayton, Delaware Gov. Jack Markell, Wisconsin Gov. Scott Walker CBS

With federal spending cuts looming -- whether the so-called "fiscal cliff" is averted or not -- governors are asking President Obama for more flexibility when it comes to running joint federal-state programs like Medicaid.

Funding for Medicaid is of particular concern for governors as they start to implement the Affordable Care Act and consider expanding the program. Currently, states have the option to expand Medicaid (which currently serves the disabled and certain low-income people) to anyone under 138 percent of the poverty line. The Affordable Care Act promises that the vast majority of the costs of expanding the program will be paid for by the federal government -- but governors are concerned the severe spending cuts coming could change that.

"We did talk briefly about the potential unintended consequences [of the "fiscal cliff"] as it relates to Medicaid," Gov. Jack Markell, D-Del., chairman of the National Governors Association, said to reporters today after meeting with the president. "Some of us have made the decision to expand Medicaid. In our case we made that decision because of the underlying economics... the fact that there's a higher federal reimbursement for the population we're already serving. If that were changed we would have to revisit that decision."

Markell and five other members of the NGA executive committee came to Washington today to discuss the "fiscal cliff," a series of tax increases and spending cuts set to kick in at the start of the new year, unless Congress acts. The other meeting participants today included Democratic Govs. Mark Dayton of Minnesota and Mike Beebe of Arkansas, as well as Republican Govs. Gary Herbert of Utah, Scott Walker of Wisconsin and Mary Fallin of Oklahoma, the vice chair of the NGA. The governors are also meeting today with House Speaker John Boehner and Senate Majority Leader Harry Reid.

Markell said the president "understands where we are coming from" when it comes to funding joint federal-state programs like Medicaid. About one third of state funding comes from the federal government, according to the Pew Center for the States, meaning Washington's spending decisionscould have a serious impact on state budgets, in areas like health care and education.

Most states, meanwhile, are legally obligated to enact balanced budgets, so state lawmakers can't keep funding programs with the promise of paying for them later. Oklahoma Gov. Mary Fallin said the states will be unveiling their budgets in January and February and need to know how Washington decisions will impact their budgets.

Utah Gov. Gary Herbert said that "President Obama pledged to us to take a look at the suggestions" the governors had for giving states more flexibility in running joint federal-state programs and that he left the meeting "encouraged."

Herbert added that state governments are "willing to do our part" when it comes to scaling back government spending. But in order to do so, he said, the governors are asking Washington to "take away some of the strings [so] we can do more with less."

Minnesota Gov. Mark Dayton said Mr. Obama "is very supportive of streamlining federal oversight."

In addition to the issue of state flexibility, Markell said the president was interested in hearing the governors' ideas for spurring economic growth. Markell said the governors will stay involved in the fiscal conversations and that Vice President Joe Biden will be their point person going forward.

Markell said the president seemed genuinely interested in reaching a deal with congressional Republicans to avert the "cliff." Mr. Obama recently put forward a plan to avert the "cliff" that would include $600 billion in spending cuts. Republicans, meanwhile, unveiled a counter proposal that would cut $900 billion in spending.

"I know the president certainly wants a deal," Markell said. "He didn't try to handicap it for us, but he's made it very clear he's going to work as hard as he can."

The governors declined to say whether they backed the president's proposal, which includes some tax increases, or the Republicans' proposal. "We felt it was imperative to focus on things that unite us, Republicans and Democrats alike," Wisconsin Gov. Scott Walker said.

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