States - Medicaid budget shortfalls under new HC reform.

Why didn't Obama cover the cost the states will see in their Medicaid programs under the plan?

One of thoes facts he forgot I guess. Most of the states are laying off people and cutting services. Yet, there's going to be money to expand Medicaid?

Why not just concentrate of the un-insured and create something just for them, and leave the rest of it alone.

http://www.nytimes.com/2009/07/20/health/policy/20health.html

Governors Fear Medicaid Costs in Health Plan
Rogelio V. Solis/Associated Press
Governors Haley Barbour of Mississippi, left, Joe Manchin of West Virginia and Jim Douglas of Vermont listen to Brian Schweitzer of Montana at the National Governors Association meeting Saturday in Biloxi, Miss.

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LinkedinDiggFacebookMixxMySpaceYahoo! BuzzPermalinkBy KEVIN SACK and ROBERT PEAR
Published: July 19, 2009
BILOXI, Miss. — The nation’s governors, Democrats as well as Republicans, voiced deep concern Sunday about the shape of the health care plan emerging from Congress, fearing that Washington was about to hand them expensive new Medicaid obligations without money to pay for them.

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Times Topics: Health Care ReformThe role of the states in a restructured health care system dominated the summer meeting of the National Governors Association here this weekend — with bipartisan animosity voiced against the plan during a closed-door luncheon on Saturday and in a private meeting on Sunday with the health and human services secretary, Kathleen Sebelius.

“I think the governors would all agree that what we don’t want from the federal government is unfunded mandates,” said Gov. Jim Douglas of Vermont, a Republican, the group’s incoming chairman. “We can’t have the Congress impose requirements that we are forced to absorb beyond our capacity to do so.”

The governors’ backlash creates yet another health care headache for the Obama administration, which has tried to recruit state leaders to pressure members of Congress to wrap up their fitful negotiations. Both Ms. Sebelius, who was Kansas’ governor before she joined the cabinet in April, and the federal Medicaid chief, Cindy Mann, made appearances at the meeting on Sunday. Meanwhile, other administration officials spent the day pushing President Obama’s proposal on television talk shows.

Mr. Obama also plans to address questions about his health plan at a news conference on Wednesday evening.

Ms. Sebelius emerged from her hour-long meeting with the governors saying that “there’s a recognition that states don’t have cash right now” and that “it’s difficult to send states the bill if they don’t have the money.”

Although many governors said significant change in how the nation handles health care was needed, they said their deep-seated fiscal troubles made it a terrible time to shift costs to the states. With the recession draining states of tax revenues even as their Medicaid rolls are surging, the National Governors Association projects that states will face aggregate deficits of $200 billion over the next three years.

Each of several health care bills coursing through Congress relies on a large increase in eligibility for Medicaid, the state and federal insurance program for the poor, as one means of moving toward universal coverage.

Because the states and the federal government share the cost, any increase in eligibility levels, benefits or payments to doctors would impose new burdens on the states unless Washington absorbs them. In at least one of several bills circulating in Congress, the states would eventually pick up a share of the new costs, and the governors fear they cannot count on provisions in other bills that they will not bear costs.

It was unclear whether the governors would draft a statement expressing their dismay, at least partly because half of them did not attend. Many, including the group’s chairman, Gov. Edward G. Rendell of Pennsylvania, a Democrat, stayed home to deal with budget crises.

Some of the group’s most notable names — Arnold Schwarzenegger of California, Sarah Palin of Alaska, Tim Pawlenty of Minnesota and Bobby Jindal of Louisiana — were not here.

But the sentiment among those who were could not have been more consistent, regardless of political party. The governors said in interviews and public sessions that the bills being drafted in Congress would not do enough to curb the growth in health spending. And they said they were convinced that a major expansion of Medicaid would leave them with heavy costs.

They are already anticipating large gaps in Medicaid financing after 2010, when stimulus money dries up. And they pointed out that Medicaid already suffered from low payment rates to health care providers, discouraging some doctors and hospitals from accepting beneficiaries. If Medicaid is expanded, states will almost surely have to increase payments to doctors to encourage more of them to participate.

Gov. Phil Bredesen of Tennessee, a Democrat, said he feared Congress was about to bestow “the mother of all unfunded mandates.”

“Medicaid is a poor vehicle for expanding coverage,” added Mr. Bredesen, a former health care executive. “It’s a 45-year-old system originally designed for poor women and their children. It’s not health care reform to dump more money into Medicaid.”

Mr. Bredesen was far from alone in his concern. “As a governor, my concern is that if we try to cost-shift to the states we’re not going to be in a position to pick up the tab,” said Gov. Christine Gregoire of Washington, also a Democrat.

“I’m personally very concerned about the cost issue, particularly the $1 trillion figures being batted around,” said Gov. Bill Richardson, the New Mexico Democrat who served in the Clinton cabinet and ran for president against Mr. Obama.

Asked about the concerns, Peter R. Orszag, director of the White House Office of Management and Budget, made two points. First, he said, one of Mr. Obama’s overriding goals was to reduce the rate of growth of health costs, and that would benefit states by relieving pressure on their budgets. In addition, he said, some versions of the legislation, including the House bill, could slightly reduce state spending on Medicaid and the Children’s Health Insurance Program over the next 10 years.

Many governors expressed frustration that the prolonged negotiations in Washington had made it difficult to gauge the potential impact on their budgets.

“There’s a concern about whether they have fully figured out a revenue stream that would cover the costs, and that if they don’t have all the dollars accounted for it will fall on the states,” said Gov. Bill Ritter Jr. of Colorado, a Democrat.

Under the health care proposals before Congress, Medicaid eligibility would be based solely on income, without regard to factors that have historically been used to decide who qualifies.

In the House bill, Medicaid would be expanded to cover all nonelderly people with incomes at or below 133 percent of the poverty level, or $29,300 for a family of four. The federal government would pay all the costs for those who were newly eligible. Medicaid would also cover newborns, for up to 60 days after birth, if they did not have insurance from other sources.

The Congressional Budget Office projects that 11 million more people would receive coverage through Medicaid under the House bill, and that it would increase federal Medicaid spending by $438 billion over 10 years. Medicaid thus accounts for about 40 percent of the cost and 30 percent of those who gain coverage.

In a draft of the bill in the Senate Finance Committee, the federal government would pick up the extra costs for perhaps five years, but states would eventually have to pay their normal share. On average, the federal government pays 57 percent.

One of the proposals being considered by the Finance Committee would encourage states to issue bonds to cover the costs of expanding Medicaid. Governors in both parties revolted, trumpeting their opposition in a conference call last week with Senator Max Baucus, the Montana Democrat who leads the committee.

“There is strong bipartisan opposition to the idea of the states’ issuing bonds to pay for operational expenses,” said Gov. Haley Barbour of Mississippi, chairman of the Republican Governors Association. “One governor said it would be like taking out a mortgage to pay the grocery bill.”