For some time, we’ve been the sole public voice warning that delays in finishing health reform hold dire financial consequences for the Commonwealth. On Wednesday, a key federal official said it publicly as well. Here’s the State House News account:
FEDS TO CONFERENCE COMMITTEE: JUST DO IT. Health care reform needs to meet Washington standards and be in place by July 1, or else the state will begin losing $385 million in federal aid, President’s Bush’s top health official told Massachusetts on Wednesday. Ostensibly in town as part of his tour to discuss the Medicare Part D changes, US Secretary of Health and Human Services Michael Leavitt promised federal reimbursements for prescription costs not covered by the new policies. But he also addressed the state’s effort to expand access to affordable health insurance, now trapped in a conference committee. “Anything that happens after the First of July means dollars lost to the state of Massachusetts,” Leavitt said. “We’re optimistic about this enough that we’re here to say let’s get this done. But implementing new systems is a complicated proposition and we’re living through that right now.” Three other conference committees – addressing welfare reform, an economic stimulus package, and a supplemental budget – have been said to wait on tenterhooks while the health care confab works through its differences, the largest of which is how to pay for all of the new insurance policies envisioned by the bills. Before meeting with Leavitt on Wednesday, Travaglini repeated the conference committee mantra: “There are still differences that are being discussed between the two proposals, but progress is being made and conversations continue to occur which give me some confidence that this very comprehensive and complex equation can be defined and balanced and defended. We’re moving.”
“…meet Washington standards and be in place by July 1, or else the state will begin losing $385 million…”
That’s the money clause with volumes embedded in a few words. Here’s a translation:
1. “385 million“: Every year since 1997, Massachusetts has pulled in hundreds of millions in extra federal Medicaid dollars as part of an “1115″ waiver. $385 million of this has come in as “MCO supp payments” or payments to Medicaid managed care organizations — particularly HealthNet associated with Boston Medical Center and Network Health associated with the Cambridge Health Alliance. These two MCO’s use part of this money for their own organizations, and the rest goes to hospitals and health centers across the state. This is the money that the feds say is at risk — $385 million times two years, equaling $770 million between 7/1/06 and 6/30/08.
2. “meet Washington standards“: The feds are demanding that as of July 1, 2006 — for the final two years of the current waiver — the state no longer use this $385M x 2 as payments to institutions and instead use it mainly to subsidize health insurance for lower income individuals and families. The House health reform bill follows this outline and uses all the dough for its insurance coverage expansion — and attempts to hold BMC and CHA harmless by “backfilling” about $210 million to them; BMC and CHA cry foul. The Senate reform bill basically leaves the $385M x 2 where it is now, essentially telling the feds, “we don’t think you’ll pull the trigger and hold back the dough.” As a result the Senate plan results in relatively little expansion of coverage for the uninsured, beyond the MassHealth expansions (see below).
Backers of the Senate version believe our all Democratic Congressional delegation will save the day and force the Bush Administration to fork over the money. Congressional sources tell us — don’t count on us to save your butts on this one.
3. “and be in place by July 1“: The feds have asked for 120 days to review any new state plan for the use of the waiver money and expect use of the new funds to be ready to roll on July 1. Senate health reform negotiators state that as long as they have a plan down in DC by March 1, all will be fine (120 days before July 1). Assuming the feds approve a plan on June 30, that will give the state about 37 seconds to put the new structure in place. Usually, it takes months, not minutes, to put these new structures in place.
Here’s another wrinkle. Both House and Senate health reform plans assume some substantial expansion in MassHealth as part of a reform plan — the House goes much further than the Senate, though both go down this road. The Romney plan (which now exists only in the Governor’s mind — though it’s having a vibrant existence there) assumed no Medicaid expansion, and proposed all new coverage expansion through new private plans no one has yet seen. The Romney folks are telling House and Senate negotiators they can’t sell the Bushies on any waiver plan that includes any Medicaid expansion (astonishingly, we apparently can’t use Medicaid money for Medicaid, they say). This matters because after the House and Senate finish their work, it’s up to the Romney Administration to sell the deal to HHS Secretary Mike Leavitt, Administrator of the Centers for Medicare & Medicaid Services (CMS) Mark McLellan, and CMS Medicaid Director Dennis Smith (apparently the first federal Medicaid director in history who hates Medicaid.)
So here’s a nightmare scenario for those of you who love thriller movies. The House and Senate hobble a deal together as best they can, splitting loaves of bread and babies in the interest of making a deal. The Romney folks don’t like it and sell it only half-heartedly to the Bushies. The Bushies tell the Commonwealth to shove it, and we’re back at the legislative ranch trying to hobble together an alternative health reform plan in May/June as the clock ticks down to July 1.
Keep this in mind as you set your vacation plans.
