The Treatment

Making Sure the States Don't Pay (Too Much) for Reform

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The House is still deliberating between two versions of the public option, as Cohn laid out earlier: a stronger version that would tie public option pay rates to Medicare “plus 5” percentage points, and a weaker version that would have negotiated rates, but also separately raise Medicaid eligibility from 133% to 150% percent above the poverty line to save money. (It’d be cheaper to cover Medicaid patients than in the public plan.)

One question I have about the negotiated-rate compromise-- how will the House make sure that state governments don’t end up having to pay more for the broadened Medicaid expansion if more people are eligible? Without an additional change, federal government would end up saving money in part by shifting the burden to states.

State governments have already begun fretting about their ability to pay for the Medicaid expansion at the current 133% rate that’s in all four bills, which would bring some 11 million people in the system. The Senate Finance bill has raised particular protestations, as it would require states to pay for an average 10 percent of the costs of expansion, exempting a few high-need states. (Currently, the House bill would give states a two-year reprieve from having to pay a set level of 10 percent). The objections have not only come from Republicans pulling out the familiar line about “unfunded mandates” but also from a wide range of Democratic governors and national legislators from cash-strapped states.

Given the potential backlash from the states, the House leadership has already anticipated these concerns. Nadeam Elshami, Nancy Pelosi’s deputy communications director, said that the negotiated-rates compromise would make sure that “the states would be held harmless” in the end. (He didn’t have the details of how they would do so on hand, but I will post them once I hear back.) Even so, toying with the Medicaid expansion is doubtlessly keeping the National Governors Association on its toesand the differences that emerging between all the versions of the bill will certainly come up again in conference.  

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