The defeat in Congress of a sweeping jobs bill could rip a $375 million hole in Georgia's budget.
The legislation contained an extension of Medicaid dollars.
Georgia is counting on the money to help balance the $17.7 billion state budget that Gov. Sonny Perdue signed into law earlier this month.
That budget - which covers the fiscal year that begins July 1 - is already lean, having weathered several rounds of cuts to keep pace with tumbling tax collections.
Advocates say a new round of Medicaid cuts force some struggling hospitals to shut their doors or prompt doctors to deny services to Medicaid patients.
Congress defeated the bill last week.
It would have extended unemployment benefits.
Contributors: Rickey Bevington