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.
That’s definitely a cause for concern. The Obama administration constantly repeats that they’ll save money on healthcare through “More savings from Medicare and Medicaid.”
Now, think on that for a moment:
The “savings” can be reached through:
1. Reducing benefits to one of the largest voter blocks in the country – the elderly. That would entail cutting down on services covered, reducing payments to providers who already don’t cover their expenses with Medicare/Medicaid’s payments. increasing Medicare/Medicaid deductibles, or raising the age one becomes eligible for Medicare.
2. Passing the buck to the states through unfunded mandates. Which, by the way, the federal government is already doing; only that now the proposed new “free healthcare” proposed will do it in a much bigger way:
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.
This would be ruinous to the states in the best of economic circumstances. Doing it during a recession is downright suicidal:
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.”
The states would have to get deeper into debt:
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.”
This means the states would be forced to raise taxes, which Obama promised not to raise.
Some of us have been saying that federal programs — not the uninsured — are driving up the price of health care. Uninsured people do not drive up demand. Insured people do. And those insured by Medicaid and Medicare have the smallest premiums (if any), the smallest co-payments (if any) and the smallest deductibles (if any).
On top of that, the government cheats.
It does not pay the cost of services rendered. Those costs are then passed on to the other consumers.
This is done because 45 years ago, when Medicaid and Medicare were being shaped up, a Democratic president and a Democratic Congress low-balled the prices.
One reason states are in dire straits is that they pay 27% to 50% of the cost of Medicaid (the program for the poor) which the states administer. The states are no angels, having milked and artificially expanded Medicaid over the years.
But now about 20% of a state’s budget is tied up in this entitlement.
It’s going to get worse.