Alexander Proposes Requiring Study of Cost to States of Another “Unfunded Mandate”: The Health Care Law’s Medicaid Expansion

Says federally mandated Medicaid costs to force Tennessee to spend “more than $1 billion over five years,” according to former Governor Bredesen

Posted on September 23, 2011

“[F]ederally mandated health care costs soak up dollars that would otherwise go to the universities. …The federal government has said, ‘we’re going to encourage you to add more people and then we’re going to pay 100 percent of it for three years and then we’re outta town, and you’re going to end up stuck with the whole bill.” – Lamar Alexander  

WASHINGTON – At a Senate Appropriations Committee meeting held Wednesday to mark up the Labor, Health and Human Services, Education, and Related Agencies Appropriations Bill, U.S. Senator Lamar Alexander (R-Tenn.) offered an amendment that would require a new estimate of the cost to states of Medicaid’s expansion under the new health care law.

Alexander said, “Our public universities in America are in grave danger of losing their quality and stature at a time when our nation needs them to help create jobs, and this is directly related to federally mandated health care costs soaking up dollars that would otherwise go to the universities. We’re telling the states that you can’t cut Medicaid or make changes, and as a result, the only thing they’re able to cut is aid to community colleges and state universities. I think it’s important for us to know exactly the impact on that.”

The amendment, which failed by a vote of 15 to 15, would require the chief actuary at the federal government’s Centers for Medicare and Medicaid Services (CMS) to determine the cost to states of implementing the Medicaid expansion required under the new health care law.

Excerpts of Alexander’s remarks in the markup follow:

“This is not a new subject of interest for me. From the time I was governor, I have done my best to try to keep increased health care spending from squeezing out support for higher education. The way state budgets work is, a certain amount of money is allocated to prisons, a certain amount to K-12, a certain amount to roads—you get on down toward the end and the discretionary money that’s left either goes to health care—specifically Medicaid—or it goes to higher education. Our public universities in America are in grave danger of losing their quality and stature at a time when our nation needs them to help create jobs. For example, in Tennessee, since 2008 and 2009, state appropriations for universities have actually decreased by 21 percent, and for two-year institutions, by 15 percent. That is directly related to federally mandated health care costs soaking up dollars that would otherwise go to the universities. To make that up, the universities are raising tuitions on students. I think we need to know the impact of that.

“The health care law has made it worse, because for a couple of years the stimulus bill gave extra money to the states—but that’s now ended. Then in another couple of years, the government will give some money to states—and that will end again. And in the meantime, we’re telling the states they can’t cut Medicaid or change services very much, and as a result, the only thing they’re able to cut is aid to community colleges and state universities. I think it’s important for us to know exactly the impact on that.

“The [Congressional Budget office] (CBO) has said it’s probably $60 billion through 2021. Our former Democratic governor has said in our state it’s more than $1 billion over five years.

“So all this amendment does is require the CMS chief actuary to tell us the answer to this question: What is the cost of the Medicaid provisions of the healthcare law on state governments? We can then take that into account as we do appropriations bills in the future and as we consider other legislation on health care and education as we go forward …

“I’m looking at this from the point of view of a governor. The federal government has said, ‘Add up to 25 million people nationally to a program which you manage and in this recession don’t cut Medicaid. Now you may have to cut community colleges, you may have to cut [university funding], but don’t cut Medicaid. And then we’re going to encourage you to add more people, and then we’re going to pay 100 percent of it for three years and then we’re outta town, and you’re going to end up stuck with the whole bill’ ….

“The CBO found it possible to evaluate the cost to states. They said it was $60 billion through 2021. There have been a variety of other estimates by the National Governors Association and others. I think we’re entitled to know—when we make the states not cut Medicaid, and when we add people to the rolls in a program that states pay part of—I think it’s important for us to know what is the cost of this unfunded mandate to states.”

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