New report: Without reform, state health costs could skyrocket

Oct 1 2009

Even as state government officials worry that a health overhaul will compel them to spend more on Medicaid, a new report finds that states face rapid cost increases if the health care system is not reformed.

"If the U.S. Congress fails to reform health care, states will spend more on their programs for the poor than they currently pay out, according to a new report on Wednesday," Reuters/Forbes reports. "The Robert Wood Johnson Foundation report shows that within a decade the number of people without health insurance could increase by more than 30 percent in more than half of the states. The uninsured are most likely to turn to public programs administered by the states."

"Governors and state legislatures are concerned that the federal plan will allow more people to sign up for Medicaid," increasing the amount states will have to spend on the program. "At the same time, mandating everyone to have health insurance could force millions of people who usually forego coverage to choose Medicaid." Under the existing system, "every state could see its spending on Medicaid and CHIP, a program for children of lower-income families, rise by more than 75 percent in 10 years; half could have their costs more than double" (Lambert, 9/30).

Other newspapers reported on the state by state results of the study:

The Associated Press/Chicago Tribune: "Without national health care reform, the number of uninsured Wisconsin residents could increase by 200,000 in the next 10 years"

The Houston Chronicle quoted Bowen Garrett, a senior researcher with the Urban Institute's health policy center, which conducted the study for the foundation: "People worry about losing what they have now, but they need to remember that what they have now is likely to change," (he) said  "Many who have employee-sponsored insurance will lose it as health care costs go up, and those fortunate enough to keep their plans will pay higher out-of-pocket costs or earn smaller wages as employers decide whether to cut on wages or benefits"  (Ackerman, 9/29).

Meanwhile, Vermont Public Radio reports that "Governor Jim Douglas [R-Vt.] is leading an effort to oppose a congressional plan that would require states to help pay for expanding the Medicaid program. Douglas says the plan is an unfunded mandate that will impose unfair financial burdens on many states" (Kinzel, 9/29).

Providence Business News: "The federal government would pick up the full cost of expanding Medicaid coverage in Rhode Island for five years under a special provision of the Senate Finance Committee's health care reform bill." Under a revision to the Finance bill, " the federal government would pick up 100 percent of the new Medicaid costs in 'high-need states' from 2014 through 2018.The bill defines 'high-need states' as those with below-average Medicaid enrollment and unemployment of 12 percent or higher in August 2009. That would apply to just four states: Rhode Island, Nevada, Michigan and Oregon" (Nesi, 9/29).

The Wall Street Journal reports on more bad news for states struggling to pay for Medicaid programs: "State tax revenues in the second quarter plunged 17% from a year earlier as rising unemployment and reduced spending hurt sales- and income-tax collections, according to Census Bureau figures released Tuesday. The decline was the sharpest since at least the 1960s… Falling revenues, combined with growing demand for social programs like Medicaid, have forced states to slash spending and scramble to raise revenue through changes including new taxes, legalized slot machines and pricier fishing licenses" (Dougherty, 9/30).