Monday, August 2nd, 2010 - 10:30
Monday, August 2, 2010 - 10:26
States have a number of challenges when it comes to implementing health reform, including expanding Medicaid with limited funds and developing insurance exchanges. They are turning to the feds for help.
Everyone I talk with these days seems to feel that the greatest challenge facing health reform is the lack of capacity of states to take on both the new tasks and the new Medicaid enrollees that are vital to success. States face ongoing budget deficits, and are obligated to balance their budgets. Simply put, states cannot print money! And there are limits to their borrowing. So, unlike the federal government, states cannot push today’s problems onto the next generation.
Many states are also grappling with the bleak situation in their pension funds for their retirees, requiring them to make painful adjustments to these programs. They are also facing higher Medicaid enrollment resulting from the dire unemployment situation, at the same time as they gird for the imminent reduction in economic stimulus funds. Bills in Congress that would help retain state and local governments retain public school teachers and extend the enhanced federal matching payments under Medicaid are stalled. Democrats in the Senate will try another attempt tonight to pass a bill to provide aid to the states, including $16.1 billion to help pay their Medical bills (http://politi.co/bgt7xx).
Federal financial assistance to states to plan for health reform is emerging, but the magnitudes are small. For example, each state may apply for a $1 million grant from the federal government to start planning for health insurance exchanges. Republicans, if they take control of Congress in November’s election, are likely to try to tie up this funding to hamstring the implementation of health reform, according to this Politico story (http://politi.co/cE3htR ).
Yet, while support is thin, the looming tasks and responsibilities for the states are great. They must figure out how to establish two separate insurance exchanges, one for individuals and one for small businesses. They must prepare to enroll up to 16 million new people in Medicaid and SCHIP, the children’s health insurance program. The federal government will pick up the full cost of covering newly eligible enrollees in Medicaid from 2014 through 2016. But states will have to contribute 5% of the cost the next year, and ultimately 10% in 2020 and subsequent years.
Perhaps the biggest challenges facing the states is not so much that they will have to contribute a small portion of the cost of new Medicaid participants, but rather how they will absorb 16 million more people into a health care delivery system that is already stretched to the max. States have made ends meet in Medicaid in part by holding down Medicaid payment rates to physicians, hospitals, and other health care providers. In many cases, the rates for both primary care and specialist physicians have been considered so low that these doctors do not participate in the Medicaid program. This means that while a Medicaid enrollee in theory has access to a full range of medical services at little or no cost, in practice, limited physician participation has been a serious problem. Community health centers have helped quite a bit, but they too frequently have long waiting times for appointments and cannot meet all the needs.
So, many ask, how can you take the current system, with limited physician participation, and drop 16 million more people in? Who will serve them? The law provides federal funding for a very temporary increase in primary care physician payment rates (to the Medicare level, but only for 2013 and 2014). This may turn out to be a Band-Aid over a festering sore.
The success of health reform may well hinge on federal policymakers listening more to the states, and working with them to address these major challenges. This Wall Street Journal story (http://bit.ly/94v4M4) chronicles how Health and Human Services Secretary Kathleen Sebelius is attempting to guide governors through the process of implementing health reform.
