Friday, October 28, 2011

Obamacare Hits the States

Several reports in the past week or so have illustrated the impact that the recession – along with Obamacare – are having on state Medicaid budgets nationwide.  To wit:

  1. A front-page article in Monday’s USA Today outlined how “a growing number of states are sharply limiting hospital stays under Medicaid to as few as 10 days a year to control” rising state spending on the program.  A related article noted a major reason for these developments: Obamacare “requires states to maintain Medicaid eligibility and enrollment standards until 2014,” when the coverage expansions under the law take effect.  So the only option states have is to reduce benefit levels or reimbursement amounts.
  2. The Los Angeles Times reported this morning about California’s newly approved 10% reimbursement reduction to many physicians and other Medicaid providers, which the state and federal government both admitted could have a significant impact on beneficiary access.  As noted above, California and other states have been forced to use the crude method of reimbursement adjustments to balance their budgets, because Washington will not grant states flexibility to make other changes in their Medicaid programs.
  3. The liberal Kaiser Family Foundation released its annual survey of state Medicaid programs yesterday.  The report again confirms that states are struggling through tough budget times, made more difficult by Obamacare’s strictures on Medicaid programs.  The report also notes that states are struggling with significant uncertainty surrounding the law itself:

States were asked to identify the biggest challenges for Medicaid in implementing health reform.  Most states identified multiple health care reform implementation challenges.  The most commonly listed challenges included: the fiscal impact of health care reform implementation, the tight implementation timelines, lack of clear federal guidance, limited staff and administrative resources to accomplish all of the required health care reform planning and implementation tasks such as streamlining eligibility processes, building an exchange and integrating Medicaid eligibility and enrollment processes with the exchange, as well as various systems and IT issues, and provider access issues.

In other words, Washington is harming states – both because it’s imposing new mandates on their Medicaid programs, and because it’s not providing clear and timely guidance on those mandates.

  1. An article in Health Affairs published this week provided new estimates of the cost of Obamacare’s Medicaid expansion under a variety of different scenarios.  The Harvard researchers found that the law’s Medicaid expansion could cost as much as $98 billion per year by 2019 – a significant portion of which will be borne by the states.

It’s worth recalling that at a time when states face budget deficits totaling a collective $175 billion, Obamacare is imposing new unfunded mandates of at least $118 billion.  All the developments above reinforce the belief that states cannot afford the Medicaid programs they have now – so why is Obamacare foisting yet more unfunded mandates on the back of broken state Medicaid systems?