This story comes from our partner

The recession-fueled state budget crisis has turned Medicaid into the next battleground in the ongoing war over President Obama’s signature health care reform law.

The president on Monday rejected a promoted by conservative Republican governors including Haley Barbour of Mississippi and Scott Walker of Wisconsin to turn Medicaid, the joint federal-state program that provides health care for the poor, into a block grant program. Such a transformation would allow states to reduce benefits and exclude all but the most destitute from coverage.

The president rejected that proposal during a closed-door session with governors attending the National Governors Association annual meeting in Washington. “The president didn’t think it was necessarily the best path,” a senior administration official who attended the session told reporters.

also sought to defuse mounting criticism of the new health care reform legislation by saying he is willing to give states an earlier opportunity to opt out of certain key requirements, provided they can find alternate ways to accomplish the law’s goals.

During his public address to the governors, Obama said he believes “the concept of shared sacrifice should prevail … If all the pain is borne by only one group – whether it is workers, or seniors or the poor – while the wealthiest among us get to keep or get more tax breaks, we’re not doing the right thing.”

Medicaid provides primary health insurance coverage to 58 million low-income Americans, mostly women and children and sets basic levels of coverage in every state. The federal government currently pays for 57 percent of the Medicaid program, which cost $387 billion in 2009, according to the .

Turning federal Medicaid support into a block grant without national standards would run counter to the intent of Obama’s Affordable Care Act, which relies on an expanded Medicaid program to cover about half the uninsured who will obtain coverage under the health care reform law. The ACA also sets a fairly high standard for minimum coverage under the law. The federal government will pay for nearly 90 percent of the additional costs that come from adding about 16 million uninsured Americans to the Medicaid rolls after health care reform goes into effect in 2015.

have seen their Medicaid rolls swell by 6 million people since the recession began in late 2007. One-time federal support from the February 2009 stimulus act helped states meet those additional obligations in the past two years, but now those funds are drying up. States are increasingly looking for ways to limit the program in order to balance their budgets, which is required by almost every state constitution.

has already said it will lop 250,000 single adults from its Medicaid rolls this fall, and Wisconsin and Maine, with newly-elected Republican governors, have similar plans. States like Georgia, Illinois, Nebraska and Missouri have introduced legislation that will reduce payments to hospitals and physicians in 2012, according to health care analysts at Families U.S.A., an advocacy group, while California, Connecticut and Georgia are contemplating benefit cuts.

Federal law requires states meet minimum standards when providing health care coverage for its least well-off citizens, but the standard isn’t very high and states can apply for waivers from even those low standards. In Mississippi, for instance, a single parent in a family of three must have income below $8,000 a year to qualify for Medicaid, which Judy Solomon, a health policy analyst at the left-leaning Center for Budget and Policy Priorities, said “is typical for states already at the minimum level.”

But that’s not how Barbour, former head of the Republican National Committee, views his state’s program. He wants to compel Medicaid patients to pay for part of their medicine, saying, according to the , that “we have people pull up at the pharmacy window in a BMW and say they can’t afford their co-payment.”

To institute such cuts, states would need the federal government to rescind its “maintenance of effort” clause, which makes aid contingent on maintaining the existing level of benefits. A state already can apply for waivers from specific mandates, such as the Children’s Health Insurance Program, if it can show it is achieving the same goals for its poorest citizens through other programs. Medicaid health maintenance organizations have grown dramatically in recent years through use of such waivers and now account for a fifth of all Medicaid spending.

To help counter the against looming Medicaid requirements in the health care reform law, the president on Monday offered states a faster path to waivers from that program. That could give states a way to avoid imposing the mandate on uninsured Americans to purchase policies – a provision probably headed for the Supreme Court since lower courts have ruled both for and against its constitutionality. If Congress agrees, alternatives to the sale of insurance policies on exchanges could begin as early as 2014 instead of 2017, which was the date specified in the original law.

However, senior administration officials cautioned that any state seeking a waiver would have to show that coverage under the alternative would be just as comprehensive as the regulated insurance policies offered through the exchanges. Their alternative would also have to be affordable as defined in the original law, cover as many people, and not increase the federal deficit.

A state could incorporate Medicaid into its alternative plan – a move that has been proposed by Gov. Mitch Daniels, R- Ind. The early waiver proposal mirrors bipartisan legislation introduced by Sens. Ron Wyden, D-Ore., Scott Brown, R-Mass., and Mary Landrieu, D-La. Administration officials working on health care reform are looking to the states to come up with innovative ways to lower the high health care costs of the five percent of the that accounts for half the program’s overall costs.

“The president said he was eager to work with states to put Medicaid on a more sustainable path,” said the senior administration official, who spoke on background. “But he wants to ensure those trade-offs aren’t on the backs of children” in the program.

This <a target="_blank" href="/medicaid/obama-medicaid-fiscal-times/">article</a&gt; first appeared on <a target="_blank" href="">KFF Health News</a> and is republished here under a <a target="_blank" href=" Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">

This column comes from our partner

A sweeping expansion of insurance coverage is headed for the president’s desk since the House passed the health care reform bill. But the end of the year-long political debate does not answer the deeper concern for millions of Americans worried about the nation’s escalating deficit: Will it pay for itself?

The answer to that question won’t come between now and the next election, when some Democrats in swing districts may lose their jobs because of the vote they cast on Sunday. Rather, it will come over the next decade as the reforms in the bill gradually go into effect.

The Obama administration and the Democratic Congress are betting that providing health care to 32 million uninsured Americans, mandating that people with pre-existing conditions aren’t turned down, and closing the Medicare prescription “doughnut hole” will assure Democratic victory in the midterm elections. They also say the bill will reduce the deficit and slow the ever-escalating rise in overall health care costs through tax increases on upper-income households, a tax on high-cost insurance, insurance exchanges and efficiencies in Medicare.

Congressional Republicans who voted unanimously against the bill claim the legislation means federal takeover of one-sixth of the economy. They say it will increase insurance premiums, cut Medicare benefits and add a massive tax increase. Their leaders vowed to push for repeal of the legislation should they win control of Congress in the fall.

The realities of the legislation do not match the hyperbole from either side. Though proponents bill the legislation as the most significant changes in the nation’s health care system since the advent of Medicare and Medicaid in 1965, the Obama era coverage reforms rely on existing government programs and private insurance, and its payment reforms are variations on themes tried before without much success. The bill doesn’t create a new federal bureaucracy or create a publicly-owned insurer to compete in the private marketplace, which was demanded by many progressive advocacy groups and supported by liberals in Congress.

Half of the estimated 32 million people who will get insurance under the bill will be enrolled in state-based Medicaid programs. While the federal government will pick up most of the cost, Medicaid chronically underpays physicians and hospitals in most states. With millions of new enrollees, states could come under increasing pressure to raise rates or not have doctors willing to participate in the program. The Mayo Clinic – highly touted as a beacon of cost containment as well as outstanding medical care – stopped accepting Medicare patients at the beginning of the year at its . They said they could no longer continue to operate the facility at a loss. Similarly, Walgreens and two other pharmacies in Washington State will no longer serve new Medicaid patients as of April 15.

The other half of the 32 million plus an estimated 9 million people covered by existing private plans will wind up buying private insurance through new exchanges set up in every state, according to the  (pdf). Besides serving as a clearing house where individuals and firms can purchase policies deemed to have adequate coverage under the new law, the exchanges will be required to police new regulations.

But most people without coverage who use the exchanges will need subsidies, since the average family health insurance policy now exceeds $13,000 a year, while two-thirds of the uninsured earn less than twice the nation’s poverty rate, according to the  (pdf). Thus, by the time the bill is fully in effect in 2019, the government will be spending an additional $212 billion a year for expanding Medicaid and subsidizing private insurance for families who work at jobs without coverage. (Employer coverage has fallen to 63 percent from 69 percent of working age adults in the past decade; most are small businesses in low-wage industries, which, if they employ over 50 workers, will now face small penalties to help pay for coverage for their employees.)

About $400 billion of the $940 billion 10-year price tag on the bill will come from tax increases, primarily on upper income households. But the administration’s assumption, confirmed by CBO, is that efficiencies in Medicare will pay for the rest. The CBO analysis showed the federal deficit will actually decrease by more than $130 billion over the bill’s first decade. Some savings – like the gradual elimination of sweetener payments for Medicare Advantage programs – will be easily achieved. But the bill, as is, is not final. What happens next are the deals, the negotiations, the trade-offs.

Many of the payment reforms may not be achieved. They could face delay or repeal on Capitol Hill, which has consistently bowed to pressure from lobbyists for medical providers like doctors, hospitals and drug and device companies. The single largest payment reform in the legislation is adjusting hospital and physician reimbursement rates for projected productivity improvements. That sounds suspiciously like the physician payment cuts that were enacted a decade ago and are rolled back every year – and will be again in April at a cost of $208 billion over the next decade. “That’s a red flag about whether these savings will ever come about,” said G. William Hoagland, a long-time Republican aide on Capitol Hill who is now vice president for public policy at Cigna, the insurance company.

But reform proponents are more optimistic. Just as passage of a sweeping health care reform bill marks a major turn in America’s approach to covering the uninsured, they believe Congress will no longer be able to ignore the long-term costs of providing that coverage.

“Congress can’t just roll over whenever any provider walks in the door,” said Timothy S. Jost, a law professor at Washington and Lee University who has been tracking the legislation closely. “The cost savings in the bill are going to take some discipline, but they are doable.”

Merrill Goozner is the author of The $800 Million Pill: The Truth behind the Cost of New Drugs.

This <a target="_blank" href="/news/032210goozner/">article</a&gt; first appeared on <a target="_blank" href="">KFF Health News</a> and is republished here under a <a target="_blank" href=" Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">

This story comes from our partner

The recession-fueled state budget crisis has turned Medicaid into the next battleground in the ongoing war over President Obama’s signature health care reform law.

The president on Monday rejected a promoted by conservative Republican governors including Haley Barbour of Mississippi and Scott Walker of Wisconsin to turn Medicaid, the joint federal-state program that provides health care for the poor, into a block grant program. Such a transformation would allow states to reduce benefits and exclude all but the most destitute from coverage.

The president rejected that proposal during a closed-door session with governors attending the National Governors Association annual meeting in Washington. “The president didn’t think it was necessarily the best path,” a senior administration official who attended the session told reporters.

also sought to defuse mounting criticism of the new health care reform legislation by saying he is willing to give states an earlier opportunity to opt out of certain key requirements, provided they can find alternate ways to accomplish the law’s goals.

During his public address to the governors, Obama said he believes “the concept of shared sacrifice should prevail … If all the pain is borne by only one group – whether it is workers, or seniors or the poor – while the wealthiest among us get to keep or get more tax breaks, we’re not doing the right thing.”

Medicaid provides primary health insurance coverage to 58 million low-income Americans, mostly women and children and sets basic levels of coverage in every state. The federal government currently pays for 57 percent of the Medicaid program, which cost $387 billion in 2009, according to the .

Turning federal Medicaid support into a block grant without national standards would run counter to the intent of Obama’s Affordable Care Act, which relies on an expanded Medicaid program to cover about half the uninsured who will obtain coverage under the health care reform law. The ACA also sets a fairly high standard for minimum coverage under the law. The federal government will pay for nearly 90 percent of the additional costs that come from adding about 16 million uninsured Americans to the Medicaid rolls after health care reform goes into effect in 2015.

have seen their Medicaid rolls swell by 6 million people since the recession began in late 2007. One-time federal support from the February 2009 stimulus act helped states meet those additional obligations in the past two years, but now those funds are drying up. States are increasingly looking for ways to limit the program in order to balance their budgets, which is required by almost every state constitution.

has already said it will lop 250,000 single adults from its Medicaid rolls this fall, and Wisconsin and Maine, with newly-elected Republican governors, have similar plans. States like Georgia, Illinois, Nebraska and Missouri have introduced legislation that will reduce payments to hospitals and physicians in 2012, according to health care analysts at Families U.S.A., an advocacy group, while California, Connecticut and Georgia are contemplating benefit cuts.

Federal law requires states meet minimum standards when providing health care coverage for its least well-off citizens, but the standard isn’t very high and states can apply for waivers from even those low standards. In Mississippi, for instance, a single parent in a family of three must have income below $8,000 a year to qualify for Medicaid, which Judy Solomon, a health policy analyst at the left-leaning Center for Budget and Policy Priorities, said “is typical for states already at the minimum level.”

But that’s not how Barbour, former head of the Republican National Committee, views his state’s program. He wants to compel Medicaid patients to pay for part of their medicine, saying, according to the , that “we have people pull up at the pharmacy window in a BMW and say they can’t afford their co-payment.”

To institute such cuts, states would need the federal government to rescind its “maintenance of effort” clause, which makes aid contingent on maintaining the existing level of benefits. A state already can apply for waivers from specific mandates, such as the Children’s Health Insurance Program, if it can show it is achieving the same goals for its poorest citizens through other programs. Medicaid health maintenance organizations have grown dramatically in recent years through use of such waivers and now account for a fifth of all Medicaid spending.

To help counter the against looming Medicaid requirements in the health care reform law, the president on Monday offered states a faster path to waivers from that program. That could give states a way to avoid imposing the mandate on uninsured Americans to purchase policies – a provision probably headed for the Supreme Court since lower courts have ruled both for and against its constitutionality. If Congress agrees, alternatives to the sale of insurance policies on exchanges could begin as early as 2014 instead of 2017, which was the date specified in the original law.

However, senior administration officials cautioned that any state seeking a waiver would have to show that coverage under the alternative would be just as comprehensive as the regulated insurance policies offered through the exchanges. Their alternative would also have to be affordable as defined in the original law, cover as many people, and not increase the federal deficit.

A state could incorporate Medicaid into its alternative plan – a move that has been proposed by Gov. Mitch Daniels, R- Ind. The early waiver proposal mirrors bipartisan legislation introduced by Sens. Ron Wyden, D-Ore., Scott Brown, R-Mass., and Mary Landrieu, D-La. Administration officials working on health care reform are looking to the states to come up with innovative ways to lower the high health care costs of the five percent of the that accounts for half the program’s overall costs.

“The president said he was eager to work with states to put Medicaid on a more sustainable path,” said the senior administration official, who spoke on background. “But he wants to ensure those trade-offs aren’t on the backs of children” in the program.

This <a target="_blank" href="/medicaid/obama-medicaid-fiscal-times/">article</a&gt; first appeared on <a target="_blank" href="">KFF Health News</a> and is republished here under a <a target="_blank" href=" Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">

This column comes from our partner

A sweeping expansion of insurance coverage is headed for the president’s desk since the House passed the health care reform bill. But the end of the year-long political debate does not answer the deeper concern for millions of Americans worried about the nation’s escalating deficit: Will it pay for itself?

The answer to that question won’t come between now and the next election, when some Democrats in swing districts may lose their jobs because of the vote they cast on Sunday. Rather, it will come over the next decade as the reforms in the bill gradually go into effect.

The Obama administration and the Democratic Congress are betting that providing health care to 32 million uninsured Americans, mandating that people with pre-existing conditions aren’t turned down, and closing the Medicare prescription “doughnut hole” will assure Democratic victory in the midterm elections. They also say the bill will reduce the deficit and slow the ever-escalating rise in overall health care costs through tax increases on upper-income households, a tax on high-cost insurance, insurance exchanges and efficiencies in Medicare.

Congressional Republicans who voted unanimously against the bill claim the legislation means federal takeover of one-sixth of the economy. They say it will increase insurance premiums, cut Medicare benefits and add a massive tax increase. Their leaders vowed to push for repeal of the legislation should they win control of Congress in the fall.

The realities of the legislation do not match the hyperbole from either side. Though proponents bill the legislation as the most significant changes in the nation’s health care system since the advent of Medicare and Medicaid in 1965, the Obama era coverage reforms rely on existing government programs and private insurance, and its payment reforms are variations on themes tried before without much success. The bill doesn’t create a new federal bureaucracy or create a publicly-owned insurer to compete in the private marketplace, which was demanded by many progressive advocacy groups and supported by liberals in Congress.

Half of the estimated 32 million people who will get insurance under the bill will be enrolled in state-based Medicaid programs. While the federal government will pick up most of the cost, Medicaid chronically underpays physicians and hospitals in most states. With millions of new enrollees, states could come under increasing pressure to raise rates or not have doctors willing to participate in the program. The Mayo Clinic – highly touted as a beacon of cost containment as well as outstanding medical care – stopped accepting Medicare patients at the beginning of the year at its . They said they could no longer continue to operate the facility at a loss. Similarly, Walgreens and two other pharmacies in Washington State will no longer serve new Medicaid patients as of April 15.

The other half of the 32 million plus an estimated 9 million people covered by existing private plans will wind up buying private insurance through new exchanges set up in every state, according to the  (pdf). Besides serving as a clearing house where individuals and firms can purchase policies deemed to have adequate coverage under the new law, the exchanges will be required to police new regulations.

But most people without coverage who use the exchanges will need subsidies, since the average family health insurance policy now exceeds $13,000 a year, while two-thirds of the uninsured earn less than twice the nation’s poverty rate, according to the  (pdf). Thus, by the time the bill is fully in effect in 2019, the government will be spending an additional $212 billion a year for expanding Medicaid and subsidizing private insurance for families who work at jobs without coverage. (Employer coverage has fallen to 63 percent from 69 percent of working age adults in the past decade; most are small businesses in low-wage industries, which, if they employ over 50 workers, will now face small penalties to help pay for coverage for their employees.)

About $400 billion of the $940 billion 10-year price tag on the bill will come from tax increases, primarily on upper income households. But the administration’s assumption, confirmed by CBO, is that efficiencies in Medicare will pay for the rest. The CBO analysis showed the federal deficit will actually decrease by more than $130 billion over the bill’s first decade. Some savings – like the gradual elimination of sweetener payments for Medicare Advantage programs – will be easily achieved. But the bill, as is, is not final. What happens next are the deals, the negotiations, the trade-offs.

Many of the payment reforms may not be achieved. They could face delay or repeal on Capitol Hill, which has consistently bowed to pressure from lobbyists for medical providers like doctors, hospitals and drug and device companies. The single largest payment reform in the legislation is adjusting hospital and physician reimbursement rates for projected productivity improvements. That sounds suspiciously like the physician payment cuts that were enacted a decade ago and are rolled back every year – and will be again in April at a cost of $208 billion over the next decade. “That’s a red flag about whether these savings will ever come about,” said G. William Hoagland, a long-time Republican aide on Capitol Hill who is now vice president for public policy at Cigna, the insurance company.

But reform proponents are more optimistic. Just as passage of a sweeping health care reform bill marks a major turn in America’s approach to covering the uninsured, they believe Congress will no longer be able to ignore the long-term costs of providing that coverage.

“Congress can’t just roll over whenever any provider walks in the door,” said Timothy S. Jost, a law professor at Washington and Lee University who has been tracking the legislation closely. “The cost savings in the bill are going to take some discipline, but they are doable.”

Merrill Goozner is the author of The $800 Million Pill: The Truth behind the Cost of New Drugs.

This <a target="_blank" href="/news/032210goozner/">article</a&gt; first appeared on <a target="_blank" href="">KFF Health News</a> and is republished here under a <a target="_blank" href=" Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">