Undermining State Authority
Flexibility in Name Only: States have played a
significant role in developing unique and innovative approaches to
address the health care needs of their citizens. During the 08
campaign, then-candidate Obama promoted the idea of state
flexibility, but as President he replaced this embrace of
flexibility with an embrace of federal standards. Obama has already
taken numerous steps to roll back many of the flexibilities
extended to states in administering Medicaid and SCHIP.
Federal Control over Health Insurance: Currently, states
regulate the health insurance available in their states. Under the
Obama plan, the federal government would take over the role of
regulator, leaving governors and state insurance commissioners to
merely implement the new federal framework.
Unknown Costs to the States: The President's plan is
estimated to cost close to $1.6 trillion over the next 10 years.
There is no easy way to pay for this reform. New taxes on
businesses and individuals during a time of economic recession
would only hurt a state economy. Also, don't be surprised when the
states themselves are left paying for part of the bill.
More Medicaid: The Bottom Layer of
Health Care Reform
More Expansions, More Expensive: A key part of Obama's
proposal is an expansion of Medicaid, increasing the total number
of people on Medicaid to about 80 million by adding between 11
million and 18 million people. The Lewin Group estimates this
expansion could cost close to $900 billion over the next 10 years.
In addition, if states were also required to increase their
Medicaid payments to Medicare levels, the Federal Funds Information
for States (FFIS) estimates it would cost between $168 billion and
$213 billion in the first year alone.
States Already Crippled by Medicaid Costs: The Government
Accountability Office has told Congress that Medicaid in its
current form is unsustainable. Congress has just provided states
with an $87 billion Medicaid bailout. Medicaid cannot be fixed by
giving it more to do.
Budget Shortfalls Persist: The National Governors
Association projects states already face a $350 billion shortfall
through FY 2011, although some of it will be offset by increased
federal dollars. Medicaid costs are borne almost entirely by
taxpayers, with recipients contributing little or nothing to the
cost of their care.
A Better Approach to Health Care
Promote True Federal-State Partnership: Instead of the
top-down approach of a federal health care reform, federal
policymakers should embrace the principles of federalism and allow
states to develop innovative ways to address their unique
challenges to health care reform.
Preserve State Flexibility Ease the burden on states by
giving them greater flexibility to modernize and manage the
Medicaid and SCHIP programs. This includes preventing the weakening
of existing state flexibilities.
Tackle Fundamental Medicaid Reform: Expanding Medicaid is
neither new, nor innovative, nor reform. Rather than expanding
Medicaid, there should be a serious effort to reform it. Such
policies would include moving healthy "moms and kids" into private
health insurance through tax credits, premium assistance, and
vouchers and adopting a "money follows the person" model for
self-directing long-term care.
For more information, please visit FixHealthCarePolicy.com.