Alexander: “We’re One Budget Year Away From a Ticking Time Bomb in the States” as Governors Try to Comply With Health Care Law Mandates

At Appropriations hearing, asks Health and Human Services Secretary Kathleen Sebelius for ways to give states flexibility “in dealing with federal Medicaid mandates”

Posted on March 8, 2012

“Our former governor, Gov. Bredesen, called [the law’s Medicaid expansion] ‘the mother of all unfunded mandates.’ He estimated that it would cost Tennessee an additional $1.1 billion between 2014 and 2019…. We’re already in a situation where rising health care costs are squeezing money out of our state budgets that otherwise would be spent on education.” – Lamar Alexander

WASHINGTON – At an Appropriations Subcommittee hearing Wednesday on the administration’s budget request for the Department of Health and Human Services, U.S. Senator Lamar Alexander (R-Tenn.) raised concerns about state budgets as “governors seek to comply with the federal requirements for the expansion of Medicaid and then federal plans for paying doctors more to serve people who get Medicaid.”

Alexander asked Health and Human Services Secretary Kathleen Sebelius:  “Don’t we have to do something to give states more flexibility in dealing with federal Medicaid mandates, in order to avoid exporting fiscal instability from Washington to state capitals that has the primary effect of squeezing down the quality of higher education and raising tuition for the students who go there?”

Alexander pointed to the health care law’s requirement that states expand Medicaid eligibility, as well as a federal plan to pay primary care doctors Medicare reimbursement rates for seeing Medicaid patients—the federal government will pay the higher reimbursement costs for 2014 and 2015, leaving states to pick up the costs in 2016 or risk cutting patient access to doctors.

The senator’s complete question for Secretary Sebelius is below:

“I’m worried that the new health care law has created a situation where we’re one budget year away from a ticking time bomb in the states for governors as they seek to comply with the federal requirements for the expansion of Medicaid and then federal plans to pay doctors more to serve people who get Medicaid.

“I know our former governor, Gov. Bredesen, called that ‘the mother of all unfunded mandates.’ He estimated that it would cost Tennessee an additional $1.1 billion between 2014 and 2019. The federal government helps with that for a while and then it’s fully a state responsibility; and then we add to that with a federal plan that [primary care] doctors be reimbursed [at the same rate as Medicare] for seeing Medicaid patients, which needs to happen – otherwise, it’s a ticket to a bus that doesn’t run. People need to be able to see a doctor.

“But [continuing to pay doctors at that level] would add another $324 million to our state and we’re already in a situation where rising health care costs are squeezing money out of our state budgets that otherwise would be spent on education.

“Now this is not something new with President Obama. This has been going on for 30 years. I used to deal with it in Tennessee almost every year. I imagine you dealt with it as governor of Kansas. You get down to the end of the budget process and you’ve got money either for Medicaid or the University of Kansas, the University of Tennessee, and it’s a very difficult choice. And the health care costs keep going up like this, and, as a result, in Tennessee last year, there was a 16 percent increase in Medicaid spending, and a 15 percent decrease in spending on higher education. That’s not ‘a Washington cut’; that’s a real cut.

“So tuition goes up at the universities and quality goes down. As I said, this isn’t new. I first suggested to President Reagan years ago that we have a swap—that the federal government take all of Medicaid and the states take all of elementary and secondary education. Senator Kassebaum from Kansas came up with a similar idea in the 80s because of this combination of federal controls and state spending.

“Don’t we have to do something to give states more flexibility in dealing with federal Medicaid mandates in order to avoid exporting fiscal instability from Washington to state capitals, which has the primary effect of squeezing down the quality of higher education and raising tuition for the students who go there?

“And if that is a problem, and it’s going to start in the next budget year, 2014, can you suggest anything that we could do to make it easier?”

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