Federal legislation approved Friday by the House of Representatives could knock a new $81 million hole in Nevada's budget.
The American Workers, State and Business Relief Act of 2010 is designed to finish some of the things put in the original stimulus legislation and to extend federal funding for increased unemployment insurance, welfare and other programs.
After approval by the U.S. Senate, the legislation included funding to extend the temporarily increased federal match for Medicaid. But two days ago, House Republicans and conservative Democrats pulled that money out of the bill. The bill passed Friday and was ordered back to the Senate.
The result if the bill isn't amended will be an $81 million shortfall in Medicaid funding, according to program administrator Chuck Duarte.
As part of the stimulus legislation, Duarte said the percentage of Medicaid services paid by the federal government in Nevada was increased from about 50 percent to less than 64 percent.
He said the Gibbons administration and Legislature relied on that funding being continued - including it in the budget during February's special session.
"We didn't have a lot of choices and neither did the governor or Legislature," he said. "It looked like something that was going to happen."
Jan Gilbert of the Progressive Leadership Alliance of Nevada said the House decision to cut that funding comes at the worst possible time when Nevada has a record number of people on Medicaid.
Assemblywoman Sheila Leslie, D-Reno, said the elimination of that Medicaid extension could create "a huge issue" for Nevada.
"We were not only anticipating it but it has been written into the budget," she said.
Leslie said Sen. Harry Reid, D-Nev. is aware of the problem and is working to restore the funding.
Duarte added that cutting Medicaid services and provider reimbursement rates isn't an option to cover most of that loss.
"There are a lot of limitations now on what can and can't be cut," he said.
Both the stimulus legislation and the newly passed health care bill contain "maintenance of effort" requirements that take away money if the state cuts Medicaid.
"The only things we can do right now is eliminate optional services," Duarte said.
The two largest optional service packages Nevada participates in are funding for personal care attendants and prescription drugs. Duarte said Friday that without those programs, the state would end up with "those folks having to need more nursing care and hospitalization."
Personal care attendants help disabled people stay in their homes and out of much more expensive institutional care. The drug program reduces the number of expensive emergency room visits recipients make when they don't get their medications.
He said one thing working to Nevada's advantage is that 29 other states also built their budgets anticipating the Medicaid funding would be continued. All of them are protesting the cut to their congressional delegations.
The issue won't be taken up in the Senate until that body reconvenes June 7. A Reid spokesman said, however, it is a top priority to review the House bill.
Duarte said the state needs to know as soon as possible what will happen with the funding. He said the money must be in place by January 2011.