Thursday, July 8, 2010

NCOIL Meeting Coverage--States Squeezed By Federal Requirements and a Weak Economy

State insurance legislators are asking how states are going to pay for health care costs including Medicaid in the midst of a fragile economy.

The theme surfaced during the summer national meeting of the National Conference of Insurance Legislators, Troy, N.Y.

Part of the answer may be a willingness to be more flexible in finding solutions, as Vermont Gov. Jim Douglas, chair of the National Governors Association, Washington, offered during a luncheon speech here. Douglas said that the number of Medicaid patients in his state was expected to grow from 25% to 28% by the end of the year. Given the large increase in costs that would be passed onto Vermont, Douglas said he went to the U.S. Department of Health and Human Services and to CMS and said that his state would be willing to accept less money if it was allowed more flexibility in how that money was spent.

Ultimately, Vermont was allowed a 5-year super waiver during which a cap was put on monies received in return for the ability to spend it in areas such as preventive care. That flexibility helped save $250 million over that 5-year period, he added. Part of that program involved determining who were heavy users of the system and getting them teams of professionals that included dieticians and other medical experts, Douglas continued.

Douglas told the NCOIL luncheon audience that it also makes sense for states to work together. For instance, he quipped, “the second largest hospital in Vermont is in New Hampshire.”

But even with the potential for cost-savings through greater innovation, states are staring at some huge costs, according to state legislators. For instance, New York spends $1 billion a week on Medicaid, according to state Sen. William Larkin, R-Cornwall-on-Hudson, N.Y. And, Rep. George Keiser, R-Bismarck, said that in North Dakota for a state of 650,000 residents, the cost for one segment of implementing the new federal health care law will be $106 million.

And with a challenging economy, unemployment increases the burden on states according to data presented by Rick Fenton, deputy director of health services with the National Association of State Medicaid Directors, Washington. According to the data provided during a session on ‘Funding Challenges Integrating Medicaid, Medicare & Private Plans,’ for every 1 percent increase in unemployment, a million additional Medicaid clients are added.

Scott Pattison, executive director with the National Association of State Budget Officers, Washington, said that data showed that Medicaid spending in states would increase 10.5% in 2010.

And, the conversation during the NCOIL session suggested that if states had to pay for federally mandated health insurance requirements, other parts of their budgets would have to be cut.

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