Cost of Healthcare Proposals Would Cripple States

The Republican Governors Association released excerpts today from letters and statements submitted by a majority of Republican governors expressing concern about the healthcare proposals working their way through Congress.

“The American people deserve to know the true costs associated with the so-called healthcare reform proposals,” said RGA Vice Chairman Tim Pawlenty. “That’s why so many governors are speaking out. Governors understand that states can’t afford unfunded mandates passed along by the federal government and their impact on the economy.”

By an overwhelming margin, the governors opposed expanding Medicaid as an option to increase healthcare accessibility. State budgets are unable to shoulder a massive unfunded mandate, which would result from such an increase and force states to either raise taxes or make further cuts to state budgets.

Below are highlights from the op-eds and letters to Congress written by 19 Republican governors.

Alabama Governor Bob Riley: “Rather than increasing the size and cost of government by putting more people on Medicaid, and thereby making more citizens dependent on government as Washington appears ready to do, Alabama is trying to reduce the burden of health insurance costs for the overwhelming majority of its employers and their employees. I believe our state can be looked to as a model of what other states should strive to achieve.”

Alaska Governor Sean Parnell: “For Alaska, the National Governors Association estimates it would cost $140 million in state general funds to expand Medicaid for all Alaskans up to 133 percent of FPL in 2015…This amount would increase to $168 million by 2019, with new state expenditures amounting to billons over time.”

Arizona Governor Jan Brewer: “I am concerned that the Medicaid expansion proposals being discussed at the federal level do not consider the fiscal difficulties states are facing and are likely to continue to face over the next few years. At the same time as Congress is considering prohibiting states from changing their Medicaid eligibility standards, there have been discussions about establishing a federal floor for Medicaid provider rates, which even further limits state flexibility in setting funding levels.”

California Governor Arnold Schwarzenegger: “The House originally proposed fully funding the expansion with federal dollars, but due to cost concerns, members decided to shift a portion of these expansion costs to states. I will be clear on this particular proposal: if Congress thinks the Medicaid expansion is too expensive for the federal government, it is absolutely unaffordable for states. Proposals in the Senate envision passing on more than $8 billion in new costs to California annually – crowding out other priority or constitutionally required state spending and presenting a false choice for all of us. I cannot and will not support federal health care reform proposals that impose billions of dollars in new costs on California each year.”

Florida Governor Charlie Crist: “Some Members of Congress have indicated that states should shoulder some of the burden to fund the expansion of Medicaid at a time when our economy and residents are struggling. To pay for this expansion, states fear the need to cut critical services like education or public safety to add more money to Medicaid. This would have a crippling effect on Florida’s state economy and the national economy.”

Hawaii Governor Linda Lingle: “Current proposals in both the House and Senate propose to expand the Medicaid program with additional costs passed down to the states. The National Governors’ Association has gone on record as opposing this action as an unfunded mandate that shifts costs to States. In most states, including Hawaii, this action would be tantamount to mandating a tax increase on every resident…To place Hawaii in a position where we would have to bear additional costs, and therefore mandate tax increase, would hurt recovery efforts and further harm residents who are struggling to make ends meet.”

Idaho Governor C.L. “Butch” Otter: “It is clear that these sweeping proposals would irresponsibly shift a substantial and unmanageable financial burden to the states. Like Idaho, many states already are functioning under severely limited and strained budgets. It is certain that the burden of these reforms would be placed upon the shoulders of hardworking Americans. The costs associated with these proposed reforms are astounding… Idaho’s tax base could not support this large unfunded mandate without resorting to tax increases… The proposed reforms would impose an undue burden on citizens already struggling in this difficult economy.”

Indiana Governor Mitch Daniels: “There is no disputing the fact that aspects of American health care, such as access and affordability, truly do need to be restructured and improved. Yet, I have serious concerns about Congress’s proposed solutions to these problems. I fear the current rush to overhaul the system will ultimately do more damage than good and create far more problems than it solves. For example, Indiana’s Healthy Indiana Plan (HIP), an innovative and successful state sponsored health insurance program would suffer greatly as Congress expands Medicaid coverage, forcing many of the Hoosiers already enrolled in HIP out of the plan and into a broken Medicaid program that does not focus on prevention, healthy lifestyles or personal responsibility. There is another way. Americans from all walks of life and every political stripe should work together with President Obama and Congress to create a set of measured and sensible reforms that bring down costs, increase access and portability and stress the importance of innovative state-run health insurance programs.”

Louisiana Governor Bobby Jindal: “I join many of my fellow Republican and Democrat governors in expressing concern with any health care legislation being signed into law that would serve as an unfunded mandate to states.”

Minnesota Governor Tim Pawlenty (from an op-ed published by the Washington Post): “Instead of returning power to patients and rewarding positive outcomes, many Democrats in Washington want a government-run plan that would require states to comply with dozens of new mandates and regulations. One study by the Lewin Group recently concluded that an estimated 114 million Americans could be displaced from their current coverage under such a plan, and another study by House Republicans said the plan could result in the loss of up to 5 million jobs over the next 10 years.

In typical fashion, the self-proclaimed experts piecing together this Democratic health- care legislation are focusing on only one leg –access –of a three-legged stool that also includes cost and quality. Expanding access to health care is a worthwhile goal. But equal or greater focus should be placed on containing costs for the vast majority of Americans who already have insurance. Those costs will not be contained by a massive expansion of federal programs.”

Mississippi Governor Haley Barbour: “The current proposals, both in the House and Senate, will expand the Medicaid program at additional costs paid not by the federal government, but passed down to the states…Chairman Baucus told the news media it would be impossible for the federal government to pick up all the costs for new Medicaid recipients, thus states would have to bear some of the costs…When the full cost of the bill is taken into account after it is fully implemented, the spending in the bill skyrockets to nearly $2 trillion over 10 years (2014-23) with a deficit of more than $600 billion.”

Nebraska Governor Dave Heineman: “This new unfunded federal Medicaid mandate could result in higher taxes on Nebraskans or in cutting state aid to Nebraska’s school districts as well as state appropriations to our universities, state colleges, and community colleges. This proposal is not in Nebraska’s best interests.”

Nevada Governor Jim Gibbons: “One common thread appears throughout recent legislative proposals: the expansion of Medicaid as a central ‘reform’ component. Simply put, the expansion of existing healthcare programs is not authentic reform and further, places the cost burden to the states at a time when states can ill afford it.”

North Dakota Governor John Hoeven: “We, along with the National Governors Association, urge extreme caution in moving forward with any plan that would commit the states, without their express participation and consent, to obligations that may financially bind them for decades into the future.”

Rhode Island Governor Donald L. Carcieri: “It is unclear how the state or federal government will be able to sustain these Medicaid expansions… and at a time of decreasing revenues and sky-rocketing deficits… The Medicaid program is hardly the best and by no means the most appropriate platform for expanding health coverage to tens-of-thousands of additional Rhode Islanders and millions of other Americans.”

South Carolina Governor Mark Sanford: “If these so-called reform proposals move forward, almost all states will have to raise taxes to manage this health care expansion… To help put this matter into perspective, when the enhanced medical assistance percentage expires at the end of 2010, South Carolina will be spending $1.2 billion, or more than 20 percent of our state budget, on Medicaid annually.”

South Dakota Governor Mike Rounds: “The mandatory expansion of Medicaid currently in congressional proposals will simply be unsustainable for states. This expansion would require us to make significant cuts in services to people or collect additional revenues in the form of increased fees or increased taxes.”

Texas Governor Rick Perry: “I am troubled by the financial impact on Texas and taxpayers and our budget. The Texas Health and Human Services Commission estimates that the various federal health care proposals circulating around Congress could add as much as $60 billion to the state budget over the next 10 years… Additionally, these bills place a new tax burden on certain businesses and provide for the federal takeover of some current state insurance functions. These one-size-fits-all government mandates are both unsustainable and unable to fix our broken health care system.”

Utah Governor Gary Herbert: “I am worried, however, that the direction of the current language of federal health system reform bills will preclude state-directed reform and place a detrimental burden on states’ budgets…The unfunded mandate of a forced Medicaid expansion will only exacerbate an already dire situation. If required to increase our Medicaid program as envisioned in Washington, Utah, and most every other state, will be forced to find the money to do so through other means. This will require states to either raise taxes or continue to cut budgets in areas currently suffering from a lack of funding.”