The following article is from the new report from Senator Tom Coburn, M.D. and Senator John Barrasso, M.D., titled "Grim Diagnosis : A check-up on the federal health law". (press release) Thus far, we have posted both the report and sections of the report. This article illustrates the true costs and reports from the CBO on what the press and the American people now call "Obamacare". President Obama and those in Congress who supported the passage of this law are to be held accountable for the laws impact..... Read on...
Related: Hundreds of thousands will lose their jobs
( see full report with footnotes and references to content here)
Today, many states are experiencing budget shortfalls, and some are in precarious financial situations. The state of California faces a $19 billion deficit. Wisconsin faces an upcoming $2.7 billion budget gap. Washington state faces a $3.3 budget shortfall for the coming two fiscal years. In Georgia, according to local media coverage, “without changes in taxes or spending policies, annual deficits of $1.5 billion to $2.1 billion” are expected for the near future.
Unfortunately, the outlook is not expected to improve much in the near future. According to the U.S. Census Bureau data, state and local government tax receipts rose only slightly in the last quarter. As the Wall Street Journal concluded, “the slow revival of tax revenue suggests budgets and spending will remain tight through this year and beyond.”
During these challenging economic times, when states are still grappling with difficult budget situations, a provision in the health care law increases costs to states by billions of dollars. The expansion of the costly Medicaid program, as well as a host of other mandates, shifts billions of dollars onto state taxpayers, leaving state legislatures and governors stuck holding the tab.
Even After “Cornhusker Kickback” Debate, State Costs Still Increase
Of the sweetheart deals that greased the process for the health care overhaul to slide through Congress, perhaps none is as famous as the Section 10201 in the Senate-passed Patient Protection and Affordable Care Act. Described as the “Cornhusker Kickback,” this Section granted the State of Nebraska special treatment. Under Section 10201, federal taxpayers would absorb the full $100 million cost for the Medicaid expansion in Nebraska. But in every other state, state taxpayers would bear significant costs for the expansion of Medicaid in their own state.
Indeed, a number of Governors expressed concern publicly about “unfunded mandates” on states in the form of a Medicaid expansion. Because the health program for low-income Americans is funded by both the federal and state governments, expanding the program would dramatically increase costs for states. Governor Phil Bredesen of Tennessee said he worried Congress was close to passing “the mother of all unfunded mandates.” Governor Christine Gregoire of Washington said her concern was that if there was a “cost-shift to the states, we’re not going to be in a position to pick up the tab.” Governor Brian Schweitzer of Montana was perhaps the clearest when he said: “governors are concerned about unfunded mandates, another situation where the federal government says you must do x and you must pay for it.” Nebraska Governor Dave Heineman warned the federal health law put the “future of education spending” in jeopardy in a letter to state education groups. And recently, Nevada gubernatorial contender Rory Reid warned that “there is potential for [the new health law] to put significant pressure on states because Medicaid rates could go up significantly.”
Perhaps in an attempt to reduce a swell of concern from state governors and or to squelch criticism about the lack of transparency in the process, President Obama publicly called for the elimination of the Cornhusker Kickback and that provision was removed. Now, under the law, the federal government will pay about 90 percent of the costs for the newly eligible Medicaid population, at a cost of $20 billion to federal taxpayers. This change removes some costs from states, but it does not eliminate all the additional costs states must absorb because of the law.
State Taxpayers Face Huge Costs From Mandates
Earlier this spring before the passage of the health overhaul, the Congressional Budget Office (CBO) estimated that “state spending on Medicaid” would increase by tens of billions of dollars “as a result of the coverage provisions.” In pegging the costs to states, they noted that “under current law, states have the flexibility to make programmatic and other budgetary changes to Medicaid and the Children’s Health Insurance Program.” But now that the health overhaul has been signed into law, states are stuck with federal mandates buried in the law that dictate many of the operations of the state-level Medicaid programs.
So how big are the costs state taxpayers must absorb from the massive Medicaid expansion or other mandates? A nearby chart lists estimates that several governors produced calculating the costs to their states – primarily from the Medicaid program. While the federal government may cover $30 billion of costs, the State of Texas alone estimates their state will face $27 billion in extra costs. Looking at these estimates, it is clear that the extra costs forced upon state taxpayers and state governments could climb into the hundreds of billions of dollars. While base data and calculations may vary, the total costs to state taxpayers across the nation could easily range in the hundreds of billions of dollars. These costs to state governments and taxpayers may not have been fully calculated by CBO, but they nonetheless are real costs that must be borne by American taxpayers.
STATE ESTIMATES: EXTRA MEDICAID COSTS
State 10-Year Costs
North Dakota $1.1 billion
Texas $27 billion
Indiana $3.6 billion
Virginia $1.5 billion
Louisiana $7.1 billion
Nebraska $766 million
Oklahoma $441 million
Mississippi $250 million
COMBINED: $41.7 BILLION
Another analysis focused on just 21 states found that expanding Medicaid would cost each state “an estimated $2.3 billion to $6.8 billion per year.” Other costs identified in the report are the “expansion-related administrative costs, beginning in 2014, which are projected to cost $11.9 billion for all 50 states through 2019.” Administrative costs are not to be underestimated. According to a recent Health Affairs report, costs related to the creation and administration of federally-mandated health care exchanges could add a total of $37.7 billion to taxpayers burden through 2019.
Governors and State Legislators Face Hard Choices
During the health care debate last December, Mississippi Governor Haley Barbour warned that “unfunded mandates would necessarily cause states to raise taxes or cut vital services like education and law enforcement.” Now, with the health care proposal the law of the land, state governors and legislatures are starting to face tough choices.
The choices states face are indeed difficult. A survey from last December of state governments shows that the budget crisis states face is nearly unparalleled. According to the survey, in the 2010 budget, 31 states cut personnel, 30 states cut K-12 education and higher education, 25 states cut transportation budgets, and 22 states cut public assistance programs. Now governors and legislatures must effectively decide what education programs or public infrastructure works will be cut even further. We support ensuring low-income Americans can access affordable health coverage, but massive federal mandates that lead to skyrocketing state costs is the wrong prescription.
