Stimulus and Medicaid

States rush to settle Medicaid bills

The federal stimulus law and a later extension provided states an extra $80 billion in 2009 and 2010 for Medicaid, the nation's health care program for the poor. This was done by reducing the state's share of the program from a national average of 40% to 28%.

This bargain rate declines slightly April 1 and expires completely July 1. That means the average state responsibility on a $1,000 Medicaid bill will rise from $280 today to $400 July 1 — a 43% increase.

The bonus federal matching rate depends on when the bill is paid, not when the service is provided or the bill is received. Because states run the $400 billion a year program — while the federal government reimburses them — states can time payments to maximize the federal share.