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New York More Likely to Lose Federal Medicaid Funding

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State and city officials in New York are bracing for the loss of $1.7 billion in federal Medicaid funding, after Congressional Democrats dropped the funding in order to win GOP support for a bill to extend unemployment benefits to millions of Americans.

At stake is $1.1 billion in supplemental Medicaid support for Albany and $600 million for New York City. The loss of those funds could mean steep cuts to services as the city and state seeks to keep new budgets in balance.

Gov. David Paterson had previously asked state lawmakers to come up with a contingency plan in the event the money is withheld. Mayor Michael Bloomberg has said if the aid is not in place by October, the city will have to resort to significant layoffs.