Republican governors are asking Washington for more flexibility regarding how they run their Medicaid programs, saying that Washington puts too many restraints on states. Separately, the House of Representatives is expected to pass legislation that would repeal a provision in the health law that would require businesses to submit a 1099 form to the Internal Revenue Service for any goods or services over $600. The Senate has also passed legislation that would strike the 1099 requirement from the bill but the House and Senate approaches differ over how to finance the change.
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JACKIE JUDD: Good day. I am Jackie Judd. This is Health on the Hill. It's been a contest of political wills this week between Republican Governors and President Obama over the health reform law. Some political observers say Mr. Obama was calling the Governors' bluff when he told them they could apply for waivers to opt-out of portions of the law in 2014 instead of 2017, as long as state-based plans met the Federal goals of expanding coverage and lowering costs. [Video Played]
At a House Committee Hearing yesterday, Mississippi Governor Haley Barbour, viewed as a potential Presidential Candidate, said the law, especially the expansion of Medicaid, is onerous. [Video Played]
Governor Barbour warned he might have to raise taxes or cut spending or both if the law remains as is. Mary Agnes Carey, senior correspondent for Kaiser Health News, attended the hearing. She is with us, as always, today. Welcome, Mary Agnes. The other Republican Governor who was on the panel was Governor Herbert of Utah. Together, what did he and Governor Barbour come to Washington wanting the Committee to hear and to understand?
MARY AGNES CAREY: They say they need more flexibility from the federal government on how they administer the Medicaid program. They talked about how, due to the recession, their Medicaid rules have risen and as we know the health law was going to add more people to the Medicaid program.
The federal government will pick up the full cost of that expanded population for three years, then it tapers down to 90 percent, but they said still with that additional federal funding, with the increase in Medicaid and the health care law, that they need more flexibility from the federal government to administer it. And in the case of a block grant, which Haley Barbour, the Governor of Mississippi, made the case for, he would prefer less money with no strings attached.
JACKIE JUDD: Traditionally, Democrats have not wanted to institute block grants for these kinds of programs. Did you hear that argument from Committee members yesterday?
MARY AGNES CAREY: I did. Democrats Frank Pallone of New Jersey and Henry Waxman of California and also Gene Green of Texas talked about, now wait a minute, we need federal involvement to make sure that the program serves the people that it is intended to serve. Their fear is a block grant could mean that some of the most vulnerable members of society would be cut from the program or that benefits would be reduced or both, and they feel it is critical for that federal partnership to stay with Medicaid.
JACKIE JUDD: The Democrat on the panel was the Governor of Massachusetts, Deval Patrick, a state where health reform was implemented several years ago. What was the message that he brought to the Committee?
MARY AGNES CAREY: He made a very passionate defense of the health law. He said there are now more employers offering coverage rather than fewer before their health law began. Of course, criticism of the federal health law is that employers will drop coverage. So, he talked about that. He said the law he felt gave him a lot of flexibility and also provides a lot of ways to look at how we pay for health care.
He readily admitted that health care costs have not been contained in his state and that continues to be a problem for the entire health care system. He thought there was a lot of flexibility in the law for states to craft approaches that work for them, not only in implementation of the law, but also in how to control health care costs.
JACKIE JUDD: Did you feel at the end of it whether the ball had moved or was this simply an opportunity for opinions to be heard?
MARY AGNES CAREY: I think it's the latter. It is not unusual for governors to come to Washington and say please give us more flexibility. I think the Republican Governors are now looking at the increase in the Medicaid eligibility. As we know, additional federal aid from the federal stimulus law for Medicaid is going to stop in June. They are worried about that. They are worried about the expansion in the health law. They are using this as an opportunity to add new juice to an old argument, but I can't tell you that it's going to stick.
JACKIE JUDD: Okay. Let's move on to another piece of the health care reform law. There is bipartisan agreement, there has been for a while, that the so-called 1099 provision, which requires businesses to report to the IRS for any vendor transaction over $600 - there is bipartisan agreement it should be repealed. But, there are some last minute problems with how it will be funded to make it deficit neutral. Bring us up-to-date.
MARY AGNES CAREY: Exactly. The House may take action today, if not today then tomorrow, on a bill to repeal the 1099. The Senate has already passed one, but the fight is over how do you pay for it? The House approach would look at folks who get the subsidies starting in 2014, again we will have the insurance exchanges and people who meet certain income requirements will get some help from the federal government to buy that coverage.
If your income increased where you were no longer in the income category to get help, the House approach would have you repay much more of that than current law, much more of the subsidy that you received. In the Senate, they have left the designation of funding to the Office of Management and Budget to look at appropriated but unspent funding.
So, it is going to be a discussion about how do you fund the repeal of the 1099? You have got very different approaches in the House and the Senate. They will have to resolve it at a conference committee and see what they can get through both chambers and what will satisfy the President.
JACKIE JUDD: And so not as easy as we once thought?
MARY AGNES CAREY: It never is as easy as we think, ever.
JACKIE JUDD: And briefly one final question, continuing resolution will keep the government in business for at least the next two weeks, March 18th. For now, does that mean that anything in the spending proposal for Fiscal 2012 related to the health care law is off the table?
MARY AGNES CAREY: They have put that aside for now. The thought was with the Senate and the House both out last week that the Senate and the House needed more time to negotiate on the continuing resolution, so they have put those combative pieces, again amendments that say no funding for anyone at Health and Human Services or the Department of Labor or the IRS to implement the health law. Those are put aside for now but they will definitely come back to the table.
JACKIE JUDD: Okay, Mary Agnes, thank you so much as always. Same time, next week.
MARY AGNES CAREY: You got it.