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Federal money kept states from cutting Medicaid: survey

WASHINGTON (Reuters) - Public healthcare programs for those with low incomes and for children stayed steady or expanded in almost all U.S. states in 2010, mostly due to extraordinary federal assistance, the Kaiser Family Foundation said on Tuesday.

Kaiser's survey found that 48 states and Washington, D.C., kept their enrollment qualifications unchanged for their Medicaid and children's health insurance programs.

While 13 states also expanded the criteria for qualifying for aid, another 14 states changed their administrative processes to make enrolling easier.

When it passed the federal economic stimulus plan in 2009, the U.S. Congress sent additional funds to states for Medicaid, the healthcare program for the poor that is administered by the states with partial reimbursements from the federal government.

Medicaid can take up to a third of a state's budget, a proportion that swells during economic downturns.

"In 2010, this role was more pronounced than ever as families losing their jobs and access to employer-based coverage turned to public programs in growing numbers," Kaiser said.

It added that without state programs, "many more individuals would have become uninsured, adding to the 50 million currently without health coverage."

One condition to receive the stimulus money, which ends in the summer, was that states not cut Medicaid spending.

Without the stimulus aid and that requirement, states would have cut funds for the program in the face of the longest and deepest recession since the Great Depression, Kaiser said.

Recently, a coalition of Republican governors and governors-elect said the requirements unduly tied up state budgets. Because they could not cut Medicaid if they took the stimulus money, states cut in other vital areas, they said.

Kaiser also found that a few states are moving ahead to implement a key part of the healthcare reform law Congress passed last year -- expanding the Medicaid rolls.

Before the law passed, adults without children could be in Medicaid only if their states applied for waivers. The law did away with that requirement and also made people with slightly higher incomes eligible to enroll in Medicaid.

Even though those new caveats will not take effect until 2014, Connecticut and the District of Columbia began moving childless adults onto Medicaid from programs that had covered them last year. Altogether, seven states provide coverage to childless adults.

"Looking ahead, states face the challenge of implementing reform while at the same time dealing with significant budget pressures due to the nation's continuing economic problems," Kaiser said.

(Reporting by Lisa Lambert; Editing by Dan Grebler)

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