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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  • edmdailycall

    Having thought that the CBO was a reliable (not altogther accurate at times) third party “arms length” reviewer, I was told today by a person that I trust that the CBO must run its numbers based on all assumptions given it by the respective administrations. Meaning, they cannot question or deconstruct the premises submitted to them… they just run the numbers using the assumptions provided. Is this truly the case?

    • oeno

      Yes and No. I’ll use their estimate of Obama’s budget plan that was released last week.

      CBO operates as if current law is the final deal (so if a tax credit expires in 2018, they assume that it stays in place until 2018 and then the next year they look at the effect of that being gone), so in the case of the Obama budget their “baseline” (if tax law, doctor fix, etc. didn’t change over the next 10 years) is way different than his changes (and it’s worse than the 90% number that was quoted by “The Washington Times” last week).

      CBO isn’t being dishonest, because they flag just about every item, “If this happens, then this will happen…”. It’s the fault of both parties grabbing the numbers and the media for just saying, “Well the CBO says…”

      Hope that helps.

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  • KGHoboken

    There is no such thing as “hiding” a cost in a bill. It was all there for everyone to see before it was signed into law. Our lawmakers have one job as elected officials – to understand what is in a bill, and to push for changes if the contents are not right for the citizens they represent.

    No one “hid” 30 million dollars – it was all there for anyone who wanted to read it.

    • katnandu

      When did they receive that final bill?” You’ll have to pass it so you can see what is in it.”

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  • aposematic

    No problem, they will just reduce the medicare rate to the medicaid rate!

    • oeno

      Now I’m not saying that’s going to happen, but I read the CBO report on the Obama budget last weekend and his budget wants to freeze Medicare at 2009 rates through the year 2020.

  • katnandu

    I’m reading reports(?) that the Republican party is ” moving off ” of the message against the healthcare bill to focus on the “jobs” message. Why would they end that narrative when it is the gift that KEEPS ON GIVING? Every day the consequences of this bill are being revealed, showing the disastrous impact it will have on States, Companies, Physicians, and Individuals. If these leaders can’t handle two messages at one time, I think it is time to retire and let others step up!

  • tomdoff

    Hey, we’ve GIVEN well over 100 BILLION$ to Israel. Why don’t we knock that off and start running the US at a profit? Sounds like a ‘conservativee’ approach to me.