Health Care Inaction: More Pain for States?

 State eNews Issue #41, March 3, 2010

President Obama’s seven-hour televised meeting between Democratic and Republican leaders last Thursday may have failed to build consensus about what should be done to curb health care spending, but experts say it did give a good overview of what all the fighting has been about.

“Actually, I was impressed at the content of the discussion once the participants abandoned their talking points,” said Deb Miller, CSG’s director of health policy. “The complexity of the issues involved in health care reform were on display. If Americans listened, they could learn a lot about the details of the proposals under consideration—taking away more nuanced detail than the usual sound bites.”

Even Senate Minority Leader Mitch McConnell described the meeting as “a good discussion,” according to The Washington Post. “I wouldn’t call it a waste of time,” he said.

Alan Weil, executive director of the National Academy for State Health Policy, said nobody broke any new ground in the daylong discussion.

“I think they did it well, effectively, productively in a positive frame as opposed to just shooting at each other from afar,” he said. “From the state perspective, I’m not sure their position has changed much. … Politically, Thursday was about preparing for the possibility that the Democrats will try to go forward on their own. … I think that’s the message of the day.”

Weil noted some common ground was evident during Thursday’s debate, but not enough to craft new legislation. For instance, both parties may agree they want to get rid of the ability of insurance companies to deny coverage for pre-existing conditions. Weil said that is impossible to do without near universal health care coverage, but Republicans don’t like the Democratic proposal that does that.

Both sides also agree that something needs to be done to reduce health care costs, Weil said, but there has been no agreement on what kind of tools need to be put into place to do that.

A Hard Road for States
So far, all signs seem to point to Democrats pushing ahead with health care reform on their own, according to The Christian Science Monitor. Miller said state officials are anxious as they wait to see what will happen.

“State policymakers are understandably anxious about what will happen in D.C.,” she said. “If no reform passes, voters will demand relief from high health care costs at the state level. But if reform does pass, states will have no choice but to implement federal mandates, including expanding their Medicaid programs at a time when state budgets are stretched even beyond the max.”

If Democrats fail in their attempt to pass a health care package without assistance from the Republicans, the cost to states could be high. A new study from The Urban Institute projects what might happen if reform fails. In the worst case scenario, which predicts slow growth in incomes and continued high growth rates for health care, every state would see its Medicaid/CHIP spending increase by more than 75 percent by 2019. In 29 states, the number of people who are uninsured would increase by more than 30 percent.

“I do think states, without reform, are definitely going to face significant growing fiscal pressure around Medicaid,” Weil said. “Part of why this is such a scary policy situation to be in is because we are seeing the erosion of employer-sponsored coverage when the economy is growing and when it’s shrinking. We can’t simply grow our way out of more people being without coverage.”
But Weil believes the next couple of years will be very tough for the states, even if a health care package is passed.

“Most provisions in health reform don’t take place until 2013 and 2014,” he said. “States are going to have a real tough road until then no matter what happens. … One of the reasons we haven’t done health reform, although all the projections are very dire, they happen gradually. Each year, you incrementally face a growing number of uninsured, incrementally face tighter Medicaid budgets and incrementally face more businesses dropping insurance because they can’t afford it. There’s no magic point at which you can’t do it anymore.”

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