After the House voted this week to approve a $26 billion aid package to states—$16 billion of which will go toward helping keep strained Medicaid programs limping along—Rep. Joe Barton, of Texas, the ranking Republican on the House Energy and Commerce Committee who voted against the measure said; "There is no emergency," "There is no pending financial catastrophe." House Republican leader John Boehner called the aid package a “payoff to union bosses and liberal special interests.”

What alternate universe do Barton, Boehner and many of their fellow Republicans who opposed the aid package live in? States of all stripes—red and blue alike—are facing a deep crisis in their Medicaid programs.Women and children are losing benefits, and eligibility requirements have only gotten more stringent.

When Congress passed the federal stimulus package in 2009, the federal government's share of Medicaid costs (Federal Medical Assistance Percentages or FMAP) were increased from between 50 and 76 percent (depending on the per capita income of the state) to between 61 and 84 percent of all Medicaid spending.

This higher matching rate was set to expire at the end of 2010, but an earlier version of this year’s jobs bill would have extended the federal matching increase for another six months. Some 30 states assumed that this funding extension—a total of $24 billion in federal funds for state Medicaid programs—was a done deal and factored it into their budgets for the fiscal year that ends next June. But Congress—paralyzed by fiscal conservative’s opposition to increased spending—stripped this funding from the jobs bill which eventually was winnowed down to a measure that mainly extended unemployment benefits.

Meanwhile, in the intervening months, concessions were made; instead of $24 billion for Medicaid, the current aid package contains the $16 million for Medicaid and $10 million for teacher and school staff salaries. The Democrats’ selling point, according to the Economic Policy Institute, is that the $10 billion for teachers included in the bill would save 140,000 school jobs, though not specifically teaching jobs, while the FMAP funding would keep about 150,000 state employees (fire-fighters, cops, etc.) in the work force.

The $26 billion is fully paid for—partially by closing tax loopholes that President Obama says encourage companies to move jobs overseas. But keeping the package budget neutral (and to gain the support in the Senate from Maine Republicans Olympia Snowe and Susan Collins) Democrats had to sacrifice another important part of the social safety net: food stamps. Some $12 billion will be stripped from the program, starting in 2014, at a time when demand for food assistance is only getting stronger. According to the U.S. Department of Agriculture, 41 million Americans are currently receiving food stamps (up 19% from just a year ago) and the agency estimates that next year’s enrollment will reach about 43.4 million.

Medicaid, teachers, food stamps—how do you choose? Lou Cannon, writing in Politics Daily calls it an “epic struggle to maintain a constant level of social services during a recession that has sent state revenues from sales, income and business taxes plummeting to their lowest levels since the Depression.”

Even so, some state officials are opposing this latest round of funding. Like the elderly person happily covered by Medicare who carried the sign in a Tea Party march that read "Keep the Government's Hands Off My Medicare", Indiana’s governor Mitch Daniels says he’s opposed the bill that increased aid to states. "We managed our way out of" the crisis, Jane Jankowski, press secretary for Daniels tells Ezra Klein. "Others didn’t."

Klein writes in The Washington Post; “That's not true, however. Indiana — which had an unemployment rate above 10 percent in June — didn't manage its way out of the crisis. It used federal funds to ride out the crisis. It used lots of stimulus money to plug some of its budget hole. It benefited hugely from the auto bailout, which kept the Midwest's manufacturing sector alive. And in February, Mitch Daniels joined 46 other governors and signed a letter asking for exactly the sort of Medicaid funding that Congress just passed. So throughout the crisis, Daniels and Indiana benefited from, and asked for, exactly the sort of help his administration is now dismissing.”

The reactions of governors like Daniels, and Republicans in the House and Senate are designed to appeal to fiscal conservatives during this all-important election year. Democrats, on the other hand, are betting that voters will respond positively if they can just get the message that this admittedly, scaled-down aid package kept more teachers, fire-fighters and cops employed. It’s a war of perception.

So how dire is the situation for Medicaid? The Kaiser Commission on Medicaid and the Uninsured released a report in May that summarized the findings from a meeting the group convened of state Medicaid directors. Under pressure to cut their budgets at the same time that Medicaid enrollment rates are rising, these directors have the added stress of  gearing up to rework their (often dysfunctional) programs and expand coverage to at least 16 million more Americans between 2014 and 2019 once the Affordable Care Act kicks in. In the Kaiser report, some state Medicaid directors reported that even with help from the newly passed aid package, they have been directed to cut their budgets by up to 10%. In states like West Virginia, Louisiana and Arkansas that receive federal matching rates of 70% or more, these cuts will be especially deeply felt. Trying to meet the budget cuts at the same time that states are preparing to ramp up their programs to meet the requirements for implementing health reform is what one director called “a prevailing state of ‘fiscal cognitive dissonance.’”

In the end, when President Obama signed the aid package on Tuesday, it officially became another stop-gap method for dealing with our deeply troubled economy. The Center on Budget and Policy Priorities says that state budgets for fiscal year 2011 face shortfalls of $121 billion, a total that is expected to “well exceed $140 billion” next year even with federal assistance. With the political paralysis that exists in Washington right now, the latest state aid bill is a stop-gap measure that is nonetheless, a hard won victory that offers at least a temporary patch for our thinning safety net.