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State Concerns About Federal Health Reform

Governors are increasingly concerned that federal health reform will hand them expensive new Medicaid obligations without money to pay for them. As reported by the New York Times on July 19, during a private meeting with the health and human services secretary and former Kansas governor Kathleen Sebelius, both Democratic and Republican governors voiced fears about overloading states at a time when they are already struggling financially.

All of the major health reform bills currently pending in Congress propose to expand Medicaid eligibility. The House bill (America's Affordable Health Choices Act of 2009, HR 3200) would expand Medicaid eligibility up to 133 percent of the federal poverty level (FPL) and could add 10 to 11 million new Medicaid enrollees in the later part of the 2010–19 period, according to the CBO. The Senate Health, Education, Labor and Pensions (HELP) Committee bill (Affordable Health Choices Act) would expand Medicaid eligibility up to 150 percent of the FPL. A draft Senate Finance Committee proposal in mid-June set Medicaid eligibility for children and pregnant women to 133 percent of FPL and 100 percent of FPL for parents and childless adults, with the expansion gradually phased in between 2010–12 (this committee has not yet released a bill).

The Senate Finance Committee draft proposal included a temporary (five-year) increase in federal funding to fully cover the costs for newly eligible populations, followed by a phase-out period to return to previous levels. The House bill would provide full federal funding for the eligibility expansion until 2015, and increase Medicaid payment rates for primary care providers to 100 percent of Medicare rates. The CBO analysis of the House bill (as of July 26) estimates these new federal outlays at $438 billion over 2010–19.

The full House and Senate did not vote on separate health reform bills before lawmakers left for the August recess. Both will reconvene on September 8th. The House may wait to see what form the Senate Finance Committee's bill takes before voting on its own legislation. The Finance Committee is working toward a bipartisan compromise, and its formal negotiations are on hold over the recess.

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