U.S. Health-Care Reform: States Hit Hardest

With the House of Representatives passage of H.R. 3962, the Affordable Health Care for America Act, and the Senate currently reviewing at least two different versions of their own Health Care reform bills, States are beginning to prepare for the possibility that the Federal government will require, by law, that they spend (millions or billions) of dollars they do not have to provide insurance to their populations.

Bills in both the Senate and the House of Representatives would make more people eligible for Medicaid, the health insurance program for the poor that states administer with reimbursements from the federal government.

At the same time, any bill that makes it to President Barack Obama to sign into law will likely mandate that people have health insurance. That would push more people to enroll in Medicaid and drive those numbers up even further.

The Individual Mandate portion of any bill would require State Medicare operations to accept an influx of new enrollees onto their books at levels never before seen in America. California, for example, already battling record high unemployment and budgetary problems would have to accommodate upwards of 1.6 million people required by law to have  coverage.

“Our number one concern is just the fiscal reality that we can’t afford our current program,” said Toby Douglas, chief deputy director of health care programs for California, at a conference of state Medicaid directors on Tuesday. “We can’t afford expansion.”

Most states are facing similar problems, according to a new Pew Research report released today finding:  10 states face looming budget disasters and that’s just one part… these bills would also require States to set up and operate a network of state-operated healthcare exchanges

Nevada expects to spend $150 million creating information technology for any exchange and will also need to add 100 staff, said Chuck Duarte, administrator of the state’s health care financing and policy division.

Some states have already expanded their Medicaid coverage or built up data infrastructure on their own. Others will be set scrambling. Since this summer most have expressed concerns that federal reforms will push their costs up without providing sufficient funds to cover new needs.

One issue all face is creating exchanges that will act in tandem with their Medicaid systems so that individuals are funneled into the most affordable insurance option.

“There is no transition time,” said Steckel of how long states would have to set up systems linking to the federal government.

Although some stimulus money was slotted to boost Medicaid in States across America to help alleviate the burden, those funds will run out well before States recover form high unemployment and a down economy.

With unemployment now the highest in a quarter of a century, states are already stretched covering Medicaid costs, the executive director of the National Association of State Medicaid Directors, Ann Kohler, said.

The sudden drop in funds will push many states off of a funding cliff, she said.

Adding to this, critics say, is the fact that Government-Run – “Medicare for All” so-called “Public Option” will bankrupt the United States, saying “Medicare is at the very root of what is wrong with American health care — and to an extent our economy — and a massive expansion of the program would quickly bankrupt the nation.”

• “Medicare’s expected future obligations exceeded premiums and dedicated taxes by an astounding $89 trillion. That’s about 5 1/2 times the size of Social Security’s ($18 trillion) unfunded liability and about six times the size of the entire U.S. economy.” See also this post on Medicare insolvency.
• “according to an Associated Press story late last year, the inspector general for the U.S. Department of Health and Human Services found that 70 percent of Medicare payments in 2008 for patient medical supplies for the elderly and disabled should not have been approved.”
• “A news story by MSNBC, based on an investigation by a subcommittee of the U.S. Senate Homeland Security Committee, reported that more than a billion dollars in claims were paid between 2001 and 2006 without valid medical diagnostic codes. The result has been a host of cases involving senseless waste.”
• cost-shifting to those with commercial insurance: “when Medicare does try to cut costs, it usually does so by cutting reimbursements to doctors. This results in cost-shifting from the government onto the backs of private insurers, employers, patients, and most of all, doctors. The most recent data available show that Medicare alone shifted $48.9 billion in costs onto the backs of the private sector one year.”  Read more on the cost-shift from Medicare and Medicaid.

With the prospect of making millions of additional people eligible for Medicaid and adding those enrollees onto the state books, States are facing the very real possibility of going bankrupt and finding themselves on the receiving end a federal government that is more intent on passing “feel good” legislation than making sure states aren’t hit hardest by their actions.

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