States Find Burdens in New Rules on Health Care

Imagine that...!!?? The states who thought the new healthcare would solve are their problems...are finding out that the opposite is actually true!

From the New York Times...
http://www.nytimes.com/2010/03/27/health/policy/27impact.html

Because of the new health care law, Arizona lawmakers must now find a way to maintain insurance coverage for 350,000 children and adults that they slashed just last week to help close a $2.6 billion budget deficit.

Louisiana officials say a reduction in federal money to hospitals that treat the uninsured under the bill could be a death knell for their state-run charity hospital system.

In California, policymakers estimate they will have to come up with an additional $500 million a year to make necessary increases in payments to Medicaid providers.

Across the country, state officials are wading through the minutiae of the health care overhaul to understand just how their governments will be affected. Even with much still to be digested, it is clear the law may be as much of a burden to some state budgets as it is a boon to uninsured consumers.

States with the largest uninsured populations, like Texas and California ...are precisely the ones that will face the biggest financial strains, in many cases magnified by existing budget shortfalls.

“The federal government has to account for states’ inability to sustain our current programs, much less expand,” said Kim Belshé, secretary of California’s Health and Human Services Agency.

But even with more federal help, the challenge for states like Alabama, Arkansas and Texas that now offer only limited Medicaid coverage will be substantial. In addition, Ms. Dunkelberg said, many children who are currently eligible but are not enrolled in Medicaid and the state Children’s Health Insurance Program will emerge and want to join, potentially costing the state several hundred million dollars.

Some states, like Arizona, face an immediate fiscal conundrum because of stipulations in the law that prohibit them from rolling back their existing Medicaid programs before the required expansion takes effect. About a decade ago, voters in Arizona approved a measure to expand Medicaid to include childless adults whose incomes were at or below the federal poverty limit. As part of an effort to close a $2.6 billion budget gap next year, state officials recently decided to end that program, along with the state’s Children’s Health Insurance Program. Gov. Jan Brewer, a Republican, signed the cuts into law last week. Now, however, the state must come up with the money to restore the programs, estimated at a billion dollars annually. “Any flexibility we used to have is gone with the new mandate,” said Tom Betlach, director of the Arizona Health Care Cost Containment System, which runs Medicaid.

Because the circumstances of the states are so varied, the challenges facing them under the legislation diverge considerably. In Louisiana, there is particular concern about what the statute will mean for the future of the state’s charity hospital system, which has a long and storied history of treating the poor in the state. The state-run hospitals are heavily dependent on special federal payments to institutions that treat large numbers of the uninsured. The new health care legislation cuts those payments significantly.

California’s fiscal woes have been particularly devastating and unrelenting. The state is now facing a $20 billion shortfall. Besides the anticipated flood of new enrollees to Medicaid, an equally urgent concern there has to do with increases to the reimbursement rate for Medicaid providers, which are currently among the lowest in the country. Under the new health care legislation, states will have to raise the Medicaid rates paid to primary-care doctors to the same level the federal government sets under Medicare, the program for the elderly. For the first two years, the federal government will pay the difference. After that, it is left up to the states whether to continue paying the higher rates, which could mean an additional $500 million in costs a year for California, officials said. But California officials said they also believe they will have to significantly raise rates for other outpatient Medicaid providers to ensure an adequate supply of providers for all the newly insured. They believe this will cost an additional $2 billion a year.