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Battles will continue, over both Medicaid expansion and the mandate
The argument of some state policymakers, says Michael Sparer, PhD, JD, department chair and professor of health policy and management at Columbia University's Mailman School of Public Health in New York City, is that the federal government is significantly increasing its oversight of the Medicaid program and its demands on state Medicaid officials; "and they believe strongly that that's the wrong way to go."
"And, of course, it also gets into politics," says Dr. Sparer. "You have many Republican governors out there who are opposed to health care reform in just about all of its forms." A number of states are suing the federal government currently, not just over the mandate, but also the Medicaid expansion itself, he notes.
Interesting legal argument
"The legal argument over the Medicaid expansion is interesting," says Dr. Sparer. "One of the things that states are claiming in the litigation is that the expansion is illegal, because it in effect requires the states to incur these additional costs."
The federal government has responded that states are, in fact, not required to do so, Dr. Sparer explains, because they do have the option to drop out of the program. "The states' response is, 'We can't simply drop out of Medicaid in 2011 after having to been in it for 50 years,'" he says. "Were a state to actually drop out, which I don't think is going to happen, that actually would end up helping the federal government in the litigation."
Dr. Sparer says that he thinks that repeal of the Patient Protection and Affordable Care Act (PPACA) is "extremely unlikely, at least before 2012. If there were a Republican-elected president and a Republican-controlled Congress, that is a whole different ball game," he says.
On the other hand, Dr. Sparer says, we can expect to see battles over appropriations for certain aspects of health care reform. "Whether it's Congress, the courts, or states, it's going to be ongoing political battles on a whole host of things," he says. "The implementation itself is long and arduous and difficult, and will inch forward as it's doing now."
As for the battle of public opinion, Dr. Sparer says this appears to be a stalemate. "I would say most Americans have a limited understanding of what is in the legislation itself," he adds. "It's such a complicated bill, and politicians are saying different things, so how the issue is framed is all up for grabs."
At the same time, Medicaid directors are trying to stay out of the legal and political battles, to the extent that this is possible, says Dr. Sparer. "Generally speaking, Medicaid directors are an extraordinarily professional and high-quality group of folks who are just trying to do their jobs," he says.
If the federal government says they have to expand Medicaid, they are going to figure out how to do so, says Dr. Sparer, and if the governor of their state tells them to cut costs, they are going to try to do it while running the highest-quality program they can. "They have a very tough job," he says. "I don't think there are many jobs in the U.S. that are tougher than being a Medicaid director in 2011. They are just trying to do it one day at a time."
Call for more flexibility
Judith Solomon, co-director of Health Policy at the Center on Budget and Policy Priorities in Washington, DC, notes that while states have concluded they can't drop out of Medicaid, they still want additional flexibility. "For example, Rhode Island's former director of Health and Human Services has touted the Rhode Island waiver as an example of a block grant approach," she says. "I think we will see more and more of those kinds of arguments."
States are arguing that they should be allowed to spend Medicaid money as they see fit, says Ms. Solomon. "States already have a lot of flexibility in the law. Federal minimum standards protect beneficiaries by, for example, giving them the right to appeal if service is denied," she says. "We think that giving the money to the states and letting them decide how to use it is not the right approach."
Two separate issues
It is important to remember that the challenges involving Medicaid expansion and budget deficits currently faced by states are two separate issues, according to Ms. Solomon. "The lion's share of the 2014 expansion will be paid by the federal government. The increase in state spending, over and beyond what they would have spent, is 1.5%," she says. "And that does not take into account the state-funded services that will now be eligible for federal reimbursement."
Ms. Solomon notes that many of the childless adults who are not receiving Medicaid get mental health and other services, all of which would be eligible for federal reimbursement.
"It's important to recognize that the expansion is really a good deal for states as well as the people, many of whom are receiving services now in states," she says.
Ms. Solomon points to the Center on Budget and Policy Priorities' October 2010 analysis, Some Recent Reports Overstate the Effect on State Budgets of the Medicaid Expansions in the Health Reform Law. "This shows that reports have overestimated the costs to states," she says, adding that previous studies have had similar findings.
"During the last recession, there were similar arguments made about Medicaid busting state budgets," says Ms. Solomon. "But when things turned around, you saw states expanding coverage, certainly for children."
Ms. Solomon acknowledges that many state Medicaid programs have cut benefits and provider rates, but points to a January 2011 report from Washington, DC-based AARP, Weathering the Storm: The Impact of the Great Recession on Long-Term Services and Supports. According to the report, 31 states cut non-Medicaid aging and disability services programs in FY 2010, and 28 states were expecting to cut these programs in FY 2011, while states are "holding steady" with Medicaid long-term services and supports.
"I think that states understand that when you are cutting Medicaid, you need to make deeper cuts to save state dollars, because of the federal match," says Ms. Solomon. "When you lose the federal match, you are losing money that would have otherwise come to states."