Health-care Reform Needs State Protections

Editor's Note: The outcome of Tuesday's special Senate election in Massachusetts was not known as Metro Pulse went to press. If the Democrats should lose this seat, the legislative outlook will be cast in doubt.

The end achieved by the momentous health-care legislation that has passed the House and Senate remains entirely laudable: namely, making health-care coverage accessible and affordable to nearly all Americans. But some of the means employed to achieve this worthy end reek of legislative legerdemain.

The worst of these are provisions that would foist some of the cost of covering the poor by expanding Medicaid onto states that are already in a fiscal bind. More than 10 million of the presently uninsured are projected to gain coverage via the legislation, which would do so by making anyone with income below 133 percent of the federal poverty line (FPL) eligible for Medicaid.

The Congressional Budget Office has placed the cost of this Medicaid expansion at $360 billion over the five years after it becomes effective in 2014. While the federal government would bear the entire cost for a time, the CBO projects that states would be saddled with $33 billion of it during the years starting in 2017 when they would be required to start ponying up between 5 percent and 10 percent of the tab.

Gov. Phil Bredesen has placed Tennessee's share of this tribute at some $750 million and branded it "the mother of all unfunded federal mandates." But other states were slower to protest until last month's outrageous "Cornhusker Kickback" in the Senate whereby Nebraska's Democratic Sen. Ben Nelson succeeded in getting his state exempted from the cost sharing as the price tag for his crucial 60th vote needed to pass the legislation.

Now, more than a dozen state attorneys general have weighed in with vows to challenge the constitutionality of this special dispensation. And California Gov. Arnold Schwarzenegger has outdone Bredesen with his denunciation that, "Health-care reform, which started as noble and needed legislation, has become a trough of bribes, deals, and loopholes."

One can only hope that House Speaker Nancy Pelosi is listening to her governor as she and other Democratic leaders of both chambers craft a final version of the legislation that President Barack Obama wants enacted prior to his upcoming State of the Union address.

Obama has been astute to show concern for any measures that would add to the mounting federal deficit, and federal assumption of the $33 billion that the health-care legislation presently extracts from the states would obviously do so. But there are many other ways to raise sufficient federal revenues to cover it, including a new federal tax on banks that Obama is now proposing.

Moreover, the very construct of the Medicaid cost sharing contained in both the House and Senate bills is flawed and ought to be rectified. What it does is establish two different tiers of cost sharing for this monstrously complex federal-state program for covering the health-care costs of various categories of indigents. For those presently eligible for the program, the federal share would remain in a means tested range between 50 percent and 75 percent. For those who become newly eligible, principally adults with no dependent children, the federal share of coverage costs would vary only slightly in the 90 percent to 95 percent range.

Medicaid eligibility rules are complicated as all get-out and vary widely from state to state. An analysis conducted for the Kaiser Commission on Medicaid and the Uninsured concludes that the two-tier cost-sharing approach will "introduce extraordinary complexity to the way Medicaid is financed... as well as incentives for gaming in that states will have to determine, for each new enrollee, whether they would be eligible for coverage through old or new rules."

It would be far better, this analysis contends, to retain the present matching formula for all and make the states whole for the cost of the newly covered by other means. The preferable way to do so, it opines, is for Washington to stop gouging the states for certain costs associated with Medicare, which is supposedly a purely federal program. These costs include a charge for the Medicare Part B premiums of low-income senior citizens who are known as "dually eligible," a similar charge for people who become disabled, and what's known as the "clawback" under which the states have been compelled to keep on covering most of the prescription drug costs of Medicaid eligibles even after Medicare's Part D drug cost coverage plan took effect in 2006.

Recommended: "A policy that would have the federal government pay for Medicare premiums and for cost sharing for acute-care services, eliminate the prescription drug clawback payment, and end the 24-month waiting period for Medicare enrollment of disabled individuals would provide considerable financial support to all states. Somewhat surprisingly, it would provide a disproportionate share of these funds to states in the South, states that will experience the greatest increase in enrollment. The result of adopting a policy that shifted these costs entirely to the federal government would mean that the current matching rate structure could stay in place and the inequalities we discussed above would not exist."