Governors Nervous About Proposed Medicaid Expansion

Governors from both parties are concerned that health reform will leave them with expensive new Medicaid obligations.

Many states have already reduced Medicaid benefits as part of larger budget cuts, "in response to the recession that has eroded state finances even while swelling Medicaid ranks," The New York Times reports. Governors, including Gov. Christine Gregoire, D-Wash., "fear the implications of the health care overhaul now being devised in Washington, D.C. … If anything, the states' fears were stoked further last week when House lawmakers drafting health legislation reached a cost compromise with conservative Blue Dog Democrats that would force states to take on a greater Medicaid spending burden than an earlier version of the bill." Under the compromise, "Medicaid eligibility would be expanded to many more people under age 65 with incomes at or below 133 percent of the poverty level — about $14,400 a year for an individual. States would pay a share of the additional costs, perhaps 7 percent, in future years. The original House bill had the federal government paying all additional costs, with the states responsible only for some extra administrative expenses" (Krauss, 8/6).

"A bipartisan group of six senators, led by Max Baucus, Democrat of Montana, the chairman of the Finance Committee, held a telephone conference call on Thursday with about a dozen governors," The New York Times reports in a separate article. Gov. Phil Bredesen, D-Tenn., "quoted Mr. Baucus as telling the governors: 'We are searching for money. One place we are looking is the states. What can you do for us?'" Breseden "said the costs for new Medicaid recipients could show up immediately, while the savings might not materialize for five years or more." In addition, Democratic senators and liberal advocacy groups told Mr. Baucus they had serious questions about whether insurance would be affordable to people of modest means under the proposal being drafted by the six senators" (Pear and Herszenhorn, 8/6).

The Hill: "'We're sensitive to their concerns. We want to do this right but make them sensitive to our imperatives, too, which are: we've got to pay for all of this,' Baucus said. 'We can't foot the entire bill for the states. We just can't do that,' Baucus said. 'We can't let U.S. taxpayers pay the full state bill' for the expansion" (Young, 8/6).

Related KHN story: Hot-Button Health Issue: Is Medicaid or Private Insurance Better for the Poor Uninsured?

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