NCPA - National Center for Policy Analysis

STATES FACE THEIR FIRST OBAMACARE TEST

April 29, 2010

States have until tomorrow to let Washington know if they plan to participate in one of the first government programs to be launched under ObamaCare -- new high-risk pools for the uninsured.  According to Grace-Marie Turner, president of the Galen Institute, the question states should be asking is: Why would we participate? 

The high-risk program is essentially insurance for individuals who have pre-existing conditions and are expensive to insure, explains Turner: 

  • The new health law allocates $5 billion for insuring them until 2014 when enrollees would be transferred to new health-insurance exchanges.
  • But Richard Foster, chief actuary of the Centers for Medicare and Medicaid Services, reported last week that the high-risk program will run out of money next year or in 2012.
  • Therefore, if states sign up for the program, they'll end up shouldering the burden for about two years after it runs out of federal money.  

This will be a heavy lift considering the other costs ObamaCare is foisting onto states, one of which is the expansion of Medicaid, a joint federal-state program originally designed to cover low-income Americans, says Turner.  Under ObamaCare, Medicaid will be expanded to cover 84 million people by 2019, up from about 50 million today, putting pressure on states' budgets. 

Georgia, Nebraska and other states have already taken a pass.  The federal government will likely set up these risk pools without their participation.  In a letter to federal Health and Human Services Secretary Kathleen Sebelius, Georgia's insurance commissioner John W. Oxendine said he feared the high-risk pools would "ultimately become the financial responsibility of Georgians in the form of an unfunded mandate."  Kansas, Sebelius's home state, among many others, is considering opting out as well. 

If more states opt not to join the federal program, Congress will have to acknowledge that there has been a public repudiation of the federal program.  That could create pressure to give states what they want-- block grants to increase their existing high-risk pools or, for states that don't have them, money to set up new ones.  Deciding whether to sign up for the high-risk program is an important early test for states to tell Washington who is in charge, says Turner. 

Source: Grace-Marie Turner, "States Face Their First ObamaCare Test," Wall Street Journal, April 29, 2010. 

For text:

http://online.wsj.com/article/SB10001424052748704471204575210180628430268.html  

 

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