States Put Medicaid on Life Support as Budgets Fall Short
Policy + Politics

States Put Medicaid on Life Support as Budgets Fall Short

At a meeting in Washington, state leaders shared cost reduction strategies and solicited federal assistance

National Governors Association

The nation’s 50 governors have many good ideas for controlling costs in America’s broken health care system. They gladly shared them with CNBC’s Maria Bartiromo, who moderated a session on "health care and the economy" at this weekend’s National Governors Association meeting in Washington.

What they didn’t want to discuss was the cost of covering the more than 25 million uninsured who will receive coverage through Medicaid under the proposed Democratic health care reform bills. Even without the number of additions, most of those programs would have gone broke this year had it not been for federal stimulus funds.

Forty-nine states would have to pay around 7 percent of the $390 billion increase in Medicaid over the next ten years to finance expansion of the program to cover the near-poor. (The one exception is Nebraska, which was given a free pass to win Ben Nelson’s vote in the Senate.) But every state will still have to pick up more than 40 percent of the traditional $3.66 trillion program, which covers the poor.

With unemployment stubbornly high and slated to remain so for years, almost every cash-strapped state is contemplating massive cutbacks in Medicaid. Their immediate goal isn’t covering the uninsured. It is getting the federal government to come up with another cash infusion to keep the program afloat — a plea for which they made at the White House on Monday morning.

"I don’t think there’s a Democratic or Republican in the room who doesn’t want to cover everybody," said Joe Manchin, the Democratic governor of West Virginia. "The thing that polarizes things is the expansion of Medicaid. A lot of us can’t afford it."

So the assembled governors trotted out their assorted pilot projects for holding down costs in the program. "We have a pay-for-performance system where we expect the practitioners to follow best practices; and when they do, they are rewarded,"said Tim Pawlenty, the Republican governor of Minnesota who is sometimes mentioned as a potential presidential candidate. "That’s generating some early savings for us."

"We need accountable care organizations responsible for the total care of the patients," said Gov. John Lynch, a Democrat from New Hampshire.

"Electronic medical records have made every sector of our economy more efficient except health care," said Gov. Dave Heineman, a Republican from Nebraska, who claimed that 98 percent of his state’s Medicaid recipients have opted into its electronic records system.

Gov. Chris Gregoire of Washington, a Democrat, called for the creation of expert panels to determine what works best in health care (so-called comparative effectiveness research) and basing payments on those panels’ decisions, "even if it costs a little more." In most cases, it would save money, she predicted, using the frequently-cited example of persistent lower back pain where surgery is "more invasive, more costly, and no better than physical therapy."

As Bartiromo went around the room, a half-dozen governors from both political parties endorsed comprehensive wellness programs as a way of holding down costs, even though the Congressional Budget Office dismisses their impact on spending. "The only way we’re going to lower utilization is to create incentives for people to take better care of themselves," said Donald Carcieri, the Republican governor of Rhode Island.

Left unmentioned was this simple fact: All those ideas are included in some form in the House and Senate-passed legislation that President Obama is trying to resuscitate ahead of this week’s bipartisan summit on health care reform. The president is seeking to reform Medicare with what the governors claim they are already doing with Medicaid.

Yet none of the governors mentioned the health care reform bill. Why?

For one, NGA meetings are exercises in bipartisanship. The governors use first names. They embrace joint programs — like the Obama administration initiative to clean up the Great Lakes announced Sunday. The political polarization that permeates Washington and depresses the rest of the nation is foreign to these confabs.

Some Democratic stalwarts will no doubt express their support for the overall reform package when they meet with the president. "It will mean huge and difficult choices for us," said Ted Strickland, the Democratic governor of Ohio. "But Medicaid should be expanded, as long as we have a more robust federal partner."

But for the most part, there will be bipartisan unity as the governors beseech the president for another bailout to prop up their Medicaid programs.