Governors Aim to Guide Feds on Health-Care Reform

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Victoria Pelham

Governors emerged Feb. 27 from meetings with top administration officials grateful for catch-phrase commitments to “flexibility” and “partnership” but still mired in concern over how health-care plans could affect their individual states.

They said their voices are critical amid expected overhauls because any decisions the federal government makes will land on their desks.

Proposals for block grants or limits on per-enrollee reimbursement, which would significantly change Medicaid financing, were adamantly opposed by some as a ticket to budget cuts. Others defended them as a chance to take Washington’s “one-size-fits-all” mentality out of the equation and address the $550 billion program’s sustainability.

And the rubber really hits the road for states when looking at Medicaid expansion, which added some 11 million beneficiaries under Obamacare. Governors said they didn’t want to penalize states who made a decision either way.

“The devil’s in the details,” Virginia Gov. Terry McAuliffe (D) told reporters at a press briefing. “The rhetoric of the campaign has hit the reality of governing.”

Efforts to Unify

In the arid state of Nevada, Gov. Brian Sandoval (R) chose to expand Medicaid’s rolls.

He said “of course” he is concerned about potential losses to the program, which covers the most vulnerable patients including disabled and seniors—striking a noticeably different tone from many Republicans in Congress committed to cutting what they deem a broken Medicaid.

Further, per capita cap proposals, which would cap federal spending on each beneficiary in a given state based on benchmarks—and are being touted on the Hill—could hurt Nevada disproportionately, he said. That’s because Nevada has one of the fastest-growing state populations, so a benchmark formula or figure from three years ago may grow outdated quickly.

Local considerations were raised by many governors.

Across from Sandoval’s border, Utah Gov. Gary Herbert (R) noted his state didn’t expand Medicaid and also has a much younger demographic than states like Arizona. His community, said, is supportive of ideas like the per capita financing changes.

“What works well in Virginia… or Hawaii may not work well in Utah,” he said.

The key issues, in Herbert’s eyes, are state flexibility and addressing Medicaid’s sustainability. Medicaid’s federal price tag could grow to $624 billion by 2026, the Congressional Budget Office projects.

McAuliffe was more concerned with maintaining accessible, affordable health care for residents, reiterating his stance against switching Medicaid to lump-sum grants.

“Whenever the federal government mentions block grants, they’re saving money and it’s going to cost states,” he said.

Block grant cuts could reach $1 trillion over 10 years, and 14 million to 21 million people could lose insurance under these types of proposals, according to Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities in Washington.

In spite of their caveats, the governors were hesitantly optimistic after their discussions with President Donald Trump, new Health and Human Services Secretary Tom Price and with each other.

Sandoval said he was heartened by the discussions.

“Those you think want to take that away want to make sure people continue to maintain coverage,” he said.

He told Bloomberg BNA Republican governors will release their own health-care plan in the coming two to three weeks. Medicaid changes will also fall under that umbrella.

Oklahoma’s Gov. Mary Fallin, a Republican, said state flexibility and cost sharing would allow per-capita caps to work while continuing health insurance.

The state leaders said the February meeting had given them the opportunity to “realign and reflect where we’re at and where we’re going” and that they’ve set a model in the process for tackling other issues.

Differences With Feds

Congressional Republicans and the White House have struggled to reach a consensus on repealing and replacing the Affordable Care Act after years of GOP vows to do so. Several proposals have trickled in from Sen. Rand Paul (R-Ky.) and Sen. Bill Cassidy (R-La.), with various ideas about what could happen to the individual mandate, essential benefits for insurance plans, health savings accounts, pre-existing condition provisions, Medicaid expansion and Medicaid financing overhauls. Republican governors are adding another layer in their efforts to guide the overhauls, according to the Center on Budget and Policy Priorities.

The organization, which seeks to evaluate how policy affects low-income Americans, said Republican governors’ draft health-care proposals—recently leaked in media coverage—are at odds with federal lawmakers. The group also noted the suggestions would allow states to cut enrollment levels.

Hannah Katch, a policy analyst with the center, told Bloomberg BNA that even with the differences in proposals, there is Republican agreement “around the idea of radically restructuring Medicaid, and I think we should all be very scared by that approach.” She said it would harm people who have nowhere else to turn, adding that members of Congress heard fear and panic when they were back in their districts last week. She hopes they will reconsider their push.

“I hope that when governors really dig into what these kinds of cuts and cost-shifting would mean for state budgets, they would realize what a terrible idea it is all around.”

---With assistance from Alex Ruoff.

To contact the reporter on this story: Victoria Pelham in Washington at vpelham@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Health Care on Bloomberg Law