State Flexibility Act

May 19, 2011 

RE: State Flexibility Act 

Dear Senator Hatch and Representative Gingrey:

On behalf of the nation’s state legislatures we thank you for introducing the State Flexibility Act. This Act would repeal the Medicaid and Children’s Health Insurance Program (CHIP) maintenance of effort requirements established in the Patient Protection and Affordable Care Act (PPACA) and related provisions established in the American Recovery and Reinvestment Act (ARRA).

The Medicaid maintenance of effort provisions in the ARRA were accompanied by enhanced Medicaid matching funds, designed to mitigate the impact of the economic downturn. The enhanced match was extended at the end of last year, but will phase-out on June 30, 2011. We firmly believe that the maintenance of effort requirements should end with the phasing-out of the enhanced federal match, or that alternatively, a permanent provision be added to the Medicaid statute that would establish a countercyclical assistance program. This countercyclical assistance program would provide states with additional support to meet the increased participation in the Medicaid program during economic downturns, natural disasters and public health emergencies and to meet the financial burdens of any accompanying maintenance of effort requirements.

NCSL supports efforts to put the federal government’s budget on solid footing. While we fully expect reductions in federal support for state and local government programs, we expect program reductions to be accompanied by: (1) greater program flexibility; (2) relief from unfunded legislative and regulatory mandates; and (3) relief from maintenance of effort requirements.

We appreciate your initiative and look forward to working with you to provide adequate financial support and more state flexibility to the Medicaid program.

Sincerely,

CC: Members of the U.S. Senate and U.S. House of Representatives