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

Call it Doc Fix 2.0.

The federal government already has the “Doc Fix,” an annual shortfall of about $20 billion that must be paid to maintain current payment rates to physicians under Medicare.

Now, it looks like President Obama’s health-care bill created another funding cliff, costing an additional $5.5 billion or so each year.

Critics say the costs were hidden from view in the $940 billion health-care bill to lower the price tag by about $30 billion, and also as a way to gain the support of doctors and hospitals without angering governors.

The recently passed bill mandated that, starting in 2013, state governments must pay primary care physicians the same amount for Medicaid recipients, who are mostly poor, as it does for Medicare recipients, who are mostly elderly.

Low Medicaid reimbursement rates have cut down on the number of physicians that will even see poor and indigent recipients in the first place.

Some states pay doctors and hospitals about the same rates for Medicaid as they do for Medicare. But states with some of the largest Medicaid populations – New York, New Jersey and California – pay some of the lowest rates for Medicaid.

New York pays primary care doctors 36 percent of the Medicare rate for Medicaid, while New Jersey pays 41 percent and California pays 47 percent, according to the Kaiser Foundation’s statistics.

All three of these states already have enormous mid-year budget shortfalls at the moment: New York’s is $3.2 billion, New Jersey’s is $2.2 billion and California’s is $6.6 billion, according to the Center on Budget and Policy Priorities, and are facing even larger deficits in the 2011 fiscal year that begins in July (New York is alone in that its fiscal year begins on April Fool’s Day).

And Medicaid already costs enormous amounts of money: in Fiscal 2007 (the most recent year available on the Kaiser Foundation’s Web site) New York spent $22 billion of what is now an $80 billion budget on the program, New Jersey spent $4.5 billion out of what is now a $32 billion budget on it, and California spent $18 billion out of what is now an $87 billion budget on Medicaid.

The health bill says that the federal government will pay the extra cost of paying higher rates for Medicaid patients. But only for two years: 2013 and 2014.

The cost for those two years of federal spending is $8 billion, according to the Congressional Budget Office.

So in 2015, the federal government will either step in and pay the extra charges, as they’ve done with the Doc Fix, or they will force states to take on the extra costs.