Obamacare: Bad for States
Would Make States’ Tough Fiscal Situations Worse. The health care takeover[i] requires all states to pay a portion of the proposed Medicaid expansion beginning in 2017—tens of billions in new state spending imposed by federal requirements. However, states cannot afford their existing Medicaid programs, which is why Congress included a $90 billion Medicaid bailout in the 2009 “stimulus” package. To make things worse, the cost of the Medicaid expansion borne by states will rise appreciably in years 2019 and beyond—further pinching state budgets.
Forces Higher State Medicaid Spending. The health care takeover gives states a higher federal match to expand the Medicaid program to all individuals earning up to 133 percent of the federal poverty level ($29,327 for a family of four). However, such an expansion—when coupled with an individual mandate to purchase insurance—is likely to increase Medicaid enrollment among individuals who are already eligible for the program—and for whom a full federal match will not be available.
Encourages States to Drop Medicaid Entirely. The health care takeover prohibits states from reducing their Medicaid eligibility standards or procedures at any point in the future. Governors in both parties have already voiced significant concerns about what Tennessee Democratic Gov. Phil Bredesen termed “the mother of all unfunded mandates” being imposed upon states.[ii] As a result of the added restrictions in Democrats’ proposals, the head of Washington state’s Medicaid program believes that states facing severe financial distress may say, “I have to get out of the Medicaid program altogether.”[iii]
Undermines State Flexibility. Provisions in the legislation significantly erode states’ independence in managing their Medicaid programs. For instance, the health care takeover requires states to include family planning services for individuals with incomes up to the highest Medicaid income threshold in each state—undermining flexibility established by Republicans in the Deficit Reduction Act of 2005.
Supersedes State Authority. The health care takeover provides that states that do not establish health insurance exchanges will see the federal government create them on states’ behalf. Furthermore, the legislation also provides that states that prohibit abortion coverage in their insurance exchanges will see their citizens’ federal tax dollars used to subsidize insurance plans that cover elective abortions in other states.
Backroom Deals Create State Inequities. The public focus on the “Cornhusker Kickback” regarding Nebraska’s Medicaid funding omits the other backroom deals included in the legislation—most of which remain, creating additional inequities among states. The health care takeover includes provisions known as the “Louisiana Purchase,” providing an extra $300 million in Medicaid funding to Louisiana.[iv] And the legislation also provides an additional $100 million in Medicaid hospital funding solely to Tennessee. Many may wonder why citizens in other states should see their taxpayer dollars fund special deals for places like Tennessee and Louisiana.
[i] Senate-passed bill (H.R. 3590) text available at http://www.opencongress.org/bill/111-h3590/text; reconciliation bill (H.R. 4872) text available at http://www.opencongress.org/bill/111-h4872/text.
[ii] Kevin Sack and Robert Pear, “Governors Fear Medicaid Costs in Health Plan,” New York Times July 19, 2009, http://www.nytimes.com/2009/07/20/health/policy/20health.html.
[iii] Clifford Krauss, “Governors Fear Added Costs in Health Care Overhaul,” New York Times August 6, 2009, http://www.nytimes.com/2009/08/07/business/07medicaid.html.
[iv] “Dems Protect Backroom Deals,” Politico February 4, 2010, http://www.politico.com/news/stories/0210/32499.html.