Saturday, December 19, 2009

Ben Nelson's selling price

Abortion might have been the issue that got the headlines for Ben Nelson's wavering on the health bill, but what he was really negotiating for was more federal money for Nebraska to cover additional Medicaid payments that would come about because of this bill. And Republicans are already pointing out the exceptions to the abortion language that Nelson was supposedly so adamant on getting. Who knows what is in a bill that was written so quickly and in such secrecy? We'll be finding all sorts of errors, contradictions, and special provisions as people have time to digest it. Of course, then it will be too late because of this artificial hurry to get the thing passed by Christmas Eve. Wonkroom at Think Progress has the language of the special provision that bought Ben Nelson's vote.
Under the current merged legislation (the version unveiled on November 18th), the federal government fully finances care for the expanded population for two years and increases its matching funds (known as FMAP) thereafter. Page 98 of the managers amendment specifically identifies Nebraska for higher federal matching funds, fully funding its expansion for an additional year:
‘‘(3) Notwithstanding subsection (b) and paragraphs (1) and (2) of this subsection, the Federal medical assistance percentage otherwise determined under subsection (b) with respect to all or any portion of a fiscal year that begins on or after January 1, 2017, for the State of Nebraska, with respect to amounts expended for newly eligible individuals described in subclause (VIII) of section 1902(a)(10)(A)(i), shall be determined as provided for under subsection (y)(1) (A) (notwithstanding the period provided for in such paragraph)
Subsection (y)(1)(A) refers to page 399 of the original merged Senate legislation which fully funds state Mediciad expansions for the first two years. The manager’s amendment also provides 2.2% increase in FMAP to help states finance their existing Medicaid programs.
We'll see whose vote cost more - Mary Landrieu's or Ben Nelson's. All the other senators are pansies for going along and not getting special carveouts for their states. When every single Democratic vote is crucial, why not hold them up. Of course, we may be finding those special provisions after people have had time to pore over the bill and figure out what all these subparagraphs are referring to.

Nelson was right to be concerned. As Paul Mirengoff at Powerline points out, this bill is a mammoth unfunded mandate that burdens the states to be on the hook for additional Medicaid payments.
Now that the Medicare expansion has been stripped from the Democrats' health care legislation, we would do well to focus on the Medicaid expansion. The legislation would expand eligibility for Medicaid to those whose income equals 133 percent or less of the poverty level. According to Mississippi Governor Haley Barbour, this would add roughly 15 million people to the program. In his state, the increase could be as high as 50 percent.

Where will the money for the expansion come from? Not from the federal government. If the feds were to foot the bill, this would explode the pretense that the legislation is "revenue neutral." To keep up that pretense, the bill would leave the states to pay for the expansion after the first three years. Gov. Barbour estimates the size of that bill at $25 billion. Call it the mother of all unfunded mandates.

The problem, of course, is that the states cannot afford to pay for the Medicaid expansion. Indeed, many states are already struggling with the cost of Medicaid as it is currently constituted. In Tennessee, for example, Democratic governor Phil Bredesen has capped the state's program, barring new entrants. Yet the Dems would require a massive expansion.

Most states face balanced budget laws. So unlike the feds, they cannot borrow from the Chinese or from anyone else. Their only options would be to raise taxes or cut services. As a practical matter, they would do both. A significant portion of the budget cuts would have to come from the education portion of the state's education budget, since that's where the majority of state money is spent. That's why Gov. Bredesen has described the options in the event of a Medicaid expansion as putting one's state "into bankruptcy" or its education system "in the tank."
In a few years when states are having to cut their education budgets to pay for this health care mandate, will the media trace back the cause to the Democrats' bill? Of course not. It will be just another one of these funding catastrophes of which few people understand the root causes. And there will be more such problems for the states as they face increased Medicaid costs. We'll see calls for more federal money as more and more doctors continue to refuse to take Medicaid patients.
The Medicaid expansion would create additional problems beyond cost. For one thing, when people exit from private policies to go on Medicaid, the price of premiums for these policies rises. As a result, many businesses, especially small ones, may well stop offering health insurance to their employees.

For another thing, a Medicaid expansion would exacerbate existing problems of access to Medicaid. Because more than one-third of doctors refuse to accept Medicaid patients, states are having a tough time making sure that those who are currently eligible for Medicaid actually have access to treatment. Imagine the effect on accessibility in the event of a massive expansion of Medicaid.

Obamcare is already unpopular, and the public doesn't know the half of it. If this legislation passes, it will come to know. The drip-drip of the consequences of Obamacare will feel like torture to state governors and, quite possibly, to many of the politicians responsible for enacting it.
Probably, we'll be hearing calls for a new federal law to force the doctors and hospitals to take the Medicaid patients.

And if you want to know what politicians' words are worth, just having this vote on Saturday mere hours after the Reid Manager's Amendment has been released violates the demand of eight Democratic senators that the health care bill be posted for 72 hours before a vote is taken. I guess Senators Lincoln, Bayh, Landrieu, Lieberman, McCaskill, Ben Nelson, Pryor, and Webb are happy to posture for the public, but when push comes to shove, they'll do what the party asks of them.