Obama health bill hid $30 billion in Medicaid costs, critics say

“It’s hard to say which is worse: intentionally hiding $29 B of spending, or intentionally creating a funding cliff. I’ll call it a tie,” said Keith Hennessey, former director of the White House National Economic Council under President George W. Bush, in a recent blog post.

Hennessey calculated, based on a November 2009 CBO estimate, that the cost of the higher Medicaid payments would be about $5.5 billion a year.

State officials in Indiana and Louisiana — which pay 61 percent and 90 percent of Medicare rates for Medicaid, respectively — have complained about the new provision.

Health officials in the state governments of New York, New Jersey and California either did not respond to a request for comment Wednesday or said they were unable to respond in just a few hours to questions about such a complicated issue.

The White House also did not respond to numerous requests for comment on why the increased Medicaid obligations were funded for only two years in the health bill.

“The political brilliance of this is that when the move comes to extend it, I assume the governors will be on board because it doesn’t cost them anything,” Hennessey said in an interview. “They figured out a way to reward the doctors without upsetting the governors.”

Governors were given the ability in the 1990s to set Medicaid payment rates themselves, around the same time that President Bill Clinton and a Republican-controlled Congress passed legislation cutting Medicare payments to doctors.

Those Medicare payment cuts have created the “Doc Fix” problem. Fearing that Medicare patients would face the same problems finding care that Medicaid patients have encountered, and under pressure from the American Medical Association, Congress has repeatedly authorized annual legislation that pays back the cuts to keep the doctors happy.

The cost of the Doc Fix over the next 10 years is $208 billion, according to the CBO.

Republicans such as Rep. Paul Ryan, of Wisconsin, argued that the Doc Fix should be included in the cost of the health bill, which was scored by the CBO as reducing the deficit by $143 billion over the first 10 years.

The GOP also came under fire after it distributed a memo that purported to be from Democratic congressional leadership and spoke of a deal between the White House and the AMA to approve another Doc Fix this spring in return for the AMA’s support for the health bill, but could not then verify where it got the memo.

Democrats charged that the memo was a hoax.

Nonetheless, if Congress again approves Doc Fix again this year, it will guarantee that Medicaid payments will also need to raise to that same rate, guaranteeing the presence of Doc Fix 2.0 in 2015.

“For a lot of states section 1202 will not be a problem,” said Edmund Haislmaier of the Heritage Foundation in a blog post, “but for some — especially New York — it triggers a countdown to a state budget fight in five years.”

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