Weekly Roundup: Obama Health Care Reform, Bane or Boon to the States?

As states debate the new costs that would accompany their participating in the Obama Health Care Reform, reported fiscal impacts on their budgets vary across the board.    

In National Federation of Independent Business v. Sebelius, the U.S. Supreme Court ruled on the constitutionality of the Patient Protection and Affordable Care Act (the ACA), upholding the law's individual mandate as a valid exercise of Congress's taxing power but striking down, as unconstitutional, that part of the Medicaid expansion which withdraws existing Medicaid funding to states that choose not to participate in expanding health care to citizens, whose incomes fall below certain threshholds.      

States cannot be coerced into accepting the Medicaid expansion.  But is this option of participating in expanded coverage a Hobson's choice states can ill afford? Or will the choice--when coupled with the individual mandate--lead to rational decisions resulting in attractive benefits? 

Detractors and officials from some states say that the Medicaid expansion, even with the federal government paying 100 percent of the cost for the first three years and never less than 90 percent, will be too costly for their states. As an added problem, "the Court’s decision [analyzing what is a tax and what is a penalty with respect to the individual mandate] "has the potential of doing a lot of damage to local . . . and state governments because a lot of these [penalties] could be construed as taxes,” according to Joe Henchman, Tax Foundation Vice President of Legal and State Projects. 

Proponents of the health-care overhaul maintain that the Medicaid expansion will actually reduce state and local government costs for uncompensated care to the uninsured, which will more than offset some, or possibly all, of the states' increased Medicaid costs. "Claims that states will bear a substantial share of the costs of expanding Medicaid . . . and that the expansion would drain state budgets do not hold up under scrutiny," says January Angeles, Senior Policy Analyst at the Center on Budget and Policy Priorities. And as reported by The Atlantic, a lot of uncompensated health-care spending comes out of municipal budgets, not state ones; the ACA could save strapped cities money.

Hospitals and other health care providers also have a stake and are beginning their efforts to convince the states to adopt the Medicaid expansion. 









Other Developments:  

Florida: Hedging receipts are excluded from sales factor, unless the hedging activities are connected to making a profit.    

New Jersey makes significant revisions to its stored value card law by enacting S.B. 1928.

Compiled by Deborah Swann 
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