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January 28, 2013

Governors, legislatures express worry over future costs

WASHINGTON — President Barack Obama thinks his health care law makes states an offer they can’t refuse.

Whether to expand Medicaid, the federal-state program for the poor and disabled, could be the most important decision facing governors and legislatures this year. The repercussions go beyond their budgets, directly affecting the well-being of residents and the finances of critical hospitals.

Here’s the offer:

If states expand their Medicaid programs to cover millions of low-income people now left out, the federal government will pick up the full cost for the first three years and 90 percent over the long haul.

About 21 million uninsured people, most of them adults, eventually would gain health coverage if all the states agree.

Adding up the Medicaid costs under the law, less than $100 billion in state spending could leverage nearly $1 trillion in federal dollars over a decade, according to the nonpartisan Urban Institute.

“It’s the biggest expansion of Medicaid in a long time, and the biggest ever in terms of adults covered,” said Mark McClellan, who ran Medicare and Medicaid when George W. Bush was president.

“Although the federal government is on the hook for most of the cost, Medicaid on the whole is one of the biggest items in state budgets and the fastest growing,” McClellan said.

A major worry for states is that deficit-burdened Washington sooner or later will renege on the 90-percent deal. The regular Medicaid match rate averages closer to 50 percent. That would represent a significant cost shift to the states.

Many Republicans also are unwilling to keep expanding government programs, particularly one as complicated as Medicaid, which has a reputation for being inefficient and unwieldy. Awaiting decisions are people such as Debra Walker of Houston, a part-time home health care provider. She had a good job with health insurance until she got laid off in 2007.

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