Grassley opposes how US stimulus bill aids states

WASHINGTON, Feb 5 (Reuters) - The economic stimulus bill the U.S. Senate is considering will favor some states over others, Sen. Chuck Grassley of Iowa said on Thursday, after introducing an amendment to change how a boost in Medicaid funds would be distributed.

“Without my amendment, the legislation is unfair to states with lower unemployment rates and states that haven’t seen the recession hit in full yet,” Grassley said in a statement.

The bill as it stands would not help his home state, said the Republican senator, one of the most powerful members of the Senate Finance Committee.

The bill would increase reimbursements to each state for Medicaid, the state-federal healthcare program, by 7.6 percent. States with high unemployment rates would receive additional reimbursements, with the total federal expenditure reaching $86.6 billion.

Grassley’s amendment would scrap this gradation and simply establish a flat increase of 9.5 percent for every state.

Under his formula, Iowa would receive 21 percent more money than it would under the current bill, said Grassley.

Grassley also said his amendment could come up at any time during floor debate in the Senate this week. The House of Representatives passed a stimulus bill last week and the Senate is expected to finish work on its version soon.

The two chambers will then reconcile their bills into a final piece of legislation to send to President Barack Obama to sign into law.

Under the bill’s current formula, New York would receive the most Medicaid funding -- $12.33 billion -- and California would follow with $10.58 billion, according to the Government Accountability Office.

Those states would remain on top if Grassley’s amendment replaces that formula, but New York would only receive $11.77 billion in Medicaid funds and California $9.76 billion, the nonpartisan auditing agency said.

Under Grassley’s formula Wyoming, which would receive the smallest portion of the allotment, would see its funding go up to $130 million from $117 million.

Reporting by Lisa Lambert; Editing by Kenneth Barry