Cheap Health Insurance :States Renew Battle with Washington over Medicaid

Author: admin, July 2nd, 2011

The new health care law is fueling an old feud between the states and Washington D.C., which has been smoldering since 1965, when Medicaid was first signed into law by President Johnson.  Since then, the states have been battling the rising costs that Medicaid imposes on them, and

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The new health care law is fueling an old feud between the states and Washington D.C., which has been smoldering since 1965, when Medicaid was first signed into law by President Johnson.  Since then, the states have been battling the rising costs that Medicaid imposes on them, and as more states are hard pressed to balance their budgets, Medicaid benefits are at the brunt of their cost cutting measures.  Enter health care reform and a new wave of resentment by states over the federal government’s encroachment on their fiscal sovereignty.

The timing couldn’t be worse for introducing another federal program that imposes additional costs and bureaucratic requirements on the states.  Even before the passage of the new law, the states have been experiencing an unprecedented growth in Medicaid enrollment brought about by the deep recession that began in early 2008.  Some states are considering alternative programs that would do away with Medicaid all together.

Just as many states are considering ways to pare back Medicaid costs, the new law heaps on additional state requirements that will have them expanding the Medicaid rolls and establishing new bureaucracies in the form of the health insurance exchanges. Although the law provides for the states to receive additional federal subsidies to manage the increased requirements, many states claim that their costs will skyrocket regardless.

States are Flexing their Sovereign Muscles
Many of the state legislatures and governors have not been coy about demonstrating their objections.  States such as Arizona and Minnesota have said that they would reject federal grants issued under the new law which would mean they could lose access to billions of federal dollars.

Another 20 states are jointly suing the federal government over the constitutionality of the federal mandate that requires everyone to buy health insurance or risk penalties if they don’t.  With the majority of states legislatures and governor’s offices now held by Republicans, we can expect additional challenges in different forms and venues.

The states that are protesting the new law have been emboldened by the ground swell of negative public sentiment against most provisions of the new law.  Generally, the public is in favor of some sort of health care reform; however, the majority rejects it in its present form. While most Americans see the need for expanding coverage to those who can’t afford it on their own, there is very little appetite for expanding the role of government or the expenditure of taxpayer money.

States Gain an Unlikely Ally
The plight of the states received congressional attention this month when a bipartisan bill was introduced that would give states a waiver that would exempt them from the requirements imposed by the health care law.  States could receive a waiver if they can come up with an alternative plan that would achieve largely the same objective of the federal law in providing the low income uninsured with a way to buy affordable coverage.

This could address one of the main concerns that the states have with the “one size fits all” approach of the federal law and provide them with the flexibility to develop programs that are more congruent with their own demographics and fiscal constraints. Additionally, the American public appears to be solidly behind empowering the states to create and manage their own, customized health care programs.  This may be the foot in the door that the states need.

photo credit: arriba

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Categories: Health Insurance Information Tags: Uncategorized