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Dems Eye Medicaid Cuts to Unstick the Unemployment/Tax Extenders Bill

June 22, 2010 - by Donny Shaw

Since late May, the Senate has been stymied by a piece of must-pass legislation, H.R. 4213, that combines a 6-month unemployment insurance extension, billions in tax credits designed to protect jobs, billions in aid for states struggling to pay for Medicaid, and tax hikes on wealthy individuals and corporations. The bill, which has been pared down several times already, costs $55 billion, which failed roll call after failed roll call has shown to be just too much for Senate moderates and conservatives to swallow this close to the midterms.

But the Democrats are committed to passing the unemployment insurance extension, and they are once again paring down the bill to round up support among moderates and overcome a Republican-led filibuster. According to CQ Politics, here’s what they are looking at now for savings:

The most significant change being discussed would shrink the cost of a $24.2 billion provision that extends extra federal Medicaid funds to struggling states. In a new version, which was circulating among lobbyists Tuesday morning but not released or confirmed by lawmakers and aides, the federal assistance first enacted in the 2009 stimulus law would be gradually phased down over the coming fiscal year.

Democrats have been insisting that the Medicaid money remain in the bill to aid vulnerable patients and help cushion the economy against potential layoffs in state governments. The House removed the money last month to cut the cost of the bill, but, under pressure, the Senate added it back.

For now, it appears that the 6-month unemployment insurance extension, which is actually an extension of the filing deadline for people looking to move into higher tiers of extended federal benefits, will not be shortened or otherwise weakened in this revision.

The big question now is if this Medicaid cut proposal will be enough to win over at least two moderates to help the Dems overcome a GOP filibuster. They have been looking mostly at Sen. Susan Collins [R, ME] and Sen. Olympia Snowe [R, ME]. According to the same CQ article, it sounds like Collins’ vote may be within reach here, but Snowe sounds like she could still be a problem:

One key swing voter, Susan Collins , R-Maine, noted that she has long advocated for a phase-down approach to the Medicaid assistance that would avoid a cliff for state budgets. “I proposed it over a year ago, because I thought it was good policy,” she said.

Olympia J. Snowe, R-Maine, said she has been meeting with Democrats about the bill and that they are looking at an approach that would shrink the cost of the Medicaid provision to $20 billion and use $4 billion in unspent stimulus money to cover some of that cost. Then, Snowe said, she has been urging Democrats to look at various spending items in the bill to see if they could be reduced. However, Snowe also wants to remove several of the revenue-raising provisions, which could increase the amount that is not paid for.

It was not clear early Tuesday how the changes being discussed would affect the deficit impact or the cloture vote count. Minority Whip Jon Kyl , R-Ariz., said he thought at least some cut in the Medicaid aid would be necessary to get the bill to pass.

Stay tuned. No official announcement has been made by Senate Dems yet on what the revision of H.R. 4213 they bring to the floor this week will look like. We will update on the blog as soon as final details are available.

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