By expanding Medicaid, the state-federal partnership that offers health insurance to low-income Americans, the Affordable Care Act set out to cover some 17 million uninsured – or roughly half of the 34 million who are expected to gain coverage under reform. But when the Supreme Court ruled on the Affordable Care Act in June, it struck down a key provision which threatened that if a state refused to co-operate in extending Medicaid to more of its citizens, it could lose the federal funding it now receives for its current Medicaid enrollees.
In a 7-to-2 decision, the justices ruled that this punishment was too coercive: “withholding of ‘existing Medicaid funds’ is ‘a gun to the head’” – that would force states to acquiesce.
As a result, states can, if they choose, opt out of the Medicaid expansion, and some governors are threatening to do just that – even though the federal government has committed to pay 100 percent of the cost from 2014 to 2017. After that, the federal share would gradually decline to 90 percent in 2020, and remain there. This is a generous offer; today the federal government now picks up just 57 percent of the Medicaid tab.
Nevertheless, some states claim that the 10 percent that they would have to ante up after 2020 is more than they can afford. A few go further and admit that this isn’t just about money: by rejecting the federal funds, they are voicing their objection to “Obamacare.”
With over a dozen conservative states leaning against expanding Medicaid to cover poor workers without health insurance, perhaps it is time to resuscitate an idea embraced by President Ronald Reagan. Let the federal government take over Medicaid lock, stock and barrel.
In 1982 the president who ushered in the modern conservative era offered to assume federal responsibility for the program that now consumes over 22 percent of state government budgets in exchange for states taking over welfare. His offer built on a series of recommendations going back to 1969 by the U.S. Advisory Commission on Intergovernmental Relations, which called for a federal takeover of all public assistance programs.
President Obama’s health care reform law, if it survives the final hurdle of next November’s election, could give that idea new life. Under the Affordable Care Act, states are responsible for creating insurance exchanges where individuals and businesses can buy individual or group health plans.
Americans believe in second chances. Mitt Romney will get his if the Supreme Court rules to throw out part, or all, of the president’s federal health insurance law. Should Romney propose replacing it with a federal version of the Massachusetts health law or a federal mega-bill that mandates a one-size-fits-all free-market solution?
The question is now central to the election — the high court has made that certain — and eclipsed in importance only by the debate over jobs and the economy.
President Obama may cite Romney’s Massachusetts reform as an inspiration for his own efforts, but there are profound differences between the laws — the size and reach, financing, the underlying philosophy. Romney sought an open marketplace for individuals to purchase benefit plans ranging from catastrophic to generous. Romney’s successor, Democratic Governor Deval Patrick, has obscured those differences by taking a big-government approach to implementation, drastically limiting choices and mandating minimum coverage levels beyond private-market norms.
Even with weak implementation, the Massachusetts law has yielded some positive results, including broadening insurance coverage, especially for minorities, and decreasing premiums for individual purchasers of insurance.
The Federal government will push forward to establish health insurance exchanges regardless of how the Supreme Court rules on the Affordable Care Act in the weeks to come, argues THCB contributor Maggie Mahar. The only sensible conclusion? The states should accept Washington’s help and open up the market for insurance online.
The Affordable Care Act (ACA) calls on the states to create health insurance exchanges – marketplaces where individuals and small businesses can shop for and compare health insurance plans. Beginning in 2014, insurers peddling policies on an exchange will have to meet the ACA’s standards by covering “essential benefits,” capping out-of-pocket expenses for individuals, and offering more transparent information about costs and benefits.
Best of all, insurers will not be able to turn down customers suffering from chronic diseases, or charge them higher premiums.
So far so good.
But some states are attempting to derail “Obamacare.” Florida, Louisiana and Alaska have openly declared that they will have nothing to do with setting up exchanges. Last week, Politico.com reported that many others are stalling. The post quoted one consultant predicting that “between five and 10 states” will meet the 2014 deadline. The American Prospect confirmed the news, adding that some states that had begun making plans “have slowed down while awaiting the Supreme Court ruling on the health law.”
Insurance exchanges have to be up and running in all of the states by October 2013 in order to be able to cover people by January 1, 2014.
If the states don’t do it, the feds have to be ready with a fallback exchange. States have to tell HHS if they intend to be ready by January 1, 2013.
The White House just released a report saying that good progress is being made in 28 states. That begs the question, what about the other 22?
Writing in Kaiser Health News, Julie Appleby recently reported that HHS has let just two contracts toward building the federal fallback exchanges. One is for $69 million to build the data hub so that federal agencies can share data with the exchanges–the IRS for example. The other contract is more directly related to building federal fallback exchanges, a $94 million contract.
But in their progress report today, the administration said that they have already advanced $729 million to the states for exchange construction––17 of those states receiving $1 million, or less. So, more than $700 million has gone to 33 states–and that is just federal money to date.
If the feds are going to be ready to launch 10 or 20 federal fallback exchanges these numbers just don’t compute. It is going to take a lot more than the $94 million HHS has contracted for to launch that many federal exchanges in the states that refuse to do so.Continue reading…
I don’t know what it is about public officials and Ponzi schemes, but the former finds the latter irresistibly attractive almost everywhere. Maybe it’s the fact that the law lets them get away with it. They get off scott-free when they do the very same thing that landed Bernie Madoff in the hoosegow.
Although national attention tends to focus on Social Security, Medicare and other unfunded federal obligations, many state and local governments are in far worse shape. As I explained at my blog the other day, post-retirement health care promises are the fastest growing component. I believe we are on the cusp of a spate of local bankruptcies. Although states cannot declare bankruptcy, they can default on their debt. In California, this seems almost inevitable.
Did you know that the average state has unfunded retiree benefits equal to more than one-fifth (22%) of the income of its residents? Seven states (Alaska, Ohio, Hawaii, New Jersey, New Mexico, Illinois and Kentucky) have unfunded obligations in excess of one-third of their states’ annual income. In Alaska, it’s about half (48%). Take Ohio, for example. The state needs 41% of one year’s income of its citizens right now — in the bank, earning interest — in order to fund its future obligations. And if it doesn’t do that this year, next year it will need even more.
Immediately after passage of health care reform, over a dozen state A.G.s sued to declare it unconstitutional, as violating states’ rights. The Florida complaint is here, and Virginia’s here. Reminiscent of southern governors in the 1960s blocking their state universities’ gates, these legal officers in effect are saying “not on our sovereign soil.” Since the constitutional issues have already been hashed through so thoroughly, what’s new to talk about?
First, the Florida complaint, which a dozen other states joined (AL, CO, ID, LA, MI, NE, PA,SC, SD, TX, UT, WA), focuses mainly on the financial burdens of expanding Medicaid. This is challenged under the “commandeering” principle, as requiring states to devote sovereign resources to achieve federal aims. But, as we know, states are free to withdraw from Medicaid, so the argument seems to fall entirely flat. The complaint makes a bait-and-switch type of estoppel argument , that states got into Medicaid without any expectation of this expansion, and now it’s too damaging for them to withdraw. So, in effect, states argue that the Constitution allows them to keep the federal carrot but refuse the federal stick. Good luck selling that to an appellate court.Continue reading…
One issue has generated little discussion during the heated health care reform debate: whether states should have the right to develop their own approaches to universal coverage.
The Health Security for New Mexicans Campaign wants to see language included in the national proposal that gives states flexibility to develop their own approaches to solving rising health care costs and growing numbers of uninsured.
The focus of current health care reform proposals is to create “insurance market exchanges.” These one-stop-shopping insurance exchanges must offer consumers — primarily the uninsured — choices of different insurance products, including some type of public option. A less than robust public option is in the proposal passed by the House of Representatives. The Senate is in the process of negotiating an alternative to the House version.