Thursday, December 03, 2009

Federal Government will Pressure States in Health Care Revenue Collecting

As the states desperately try to pass legislation to protect itself from the many potentially adverse effects of the President's health care proposal, the federal government is working all the harder to make sure state governments do the heavy lifting for the bill's funding.

According to a recent article by Dick Morris and Eileen McGann, the amount of spending required for the new Medicaid package is so staggering, it requires state as well as federal funding. Southern states have tended to try to contain costs by keeping Medicare spending in check. The Obama administration is planning on forcing states to bring more dollars to the table.
The authors cite the following examples:

  • My home state of Texas will be hit the hardest ($2.8 billion in additional state spending), Pennsylvania will be second ($1.5 billion), followed by California ($1.4 billion), and finally Florida ($909 million).

  • The amount is so high, financially strapped Florida may believe it has no choice but to impose an income tax. This is a practice the state has long tried to avoid.

  • The impact may include political tones, since for many of the states represented by swing senators in the health care debate, the required increases in state spending are likely to be quite high, say Morris and McGann:

  • In the state of Arkansas, where swing Senators Mark Pryor and Blanche Lincoln live, the increased spending required under the Obamacare bill would come to over $400 million (not counting the federal share). This adds up to a 10 percent increase in state spending. Lincoln is considered one of the most vulnerable Senators in 2010, so this debate has particular meaning to her.

  • In Louisiana, Senator Mary Landrieu is literally being accused of selling her vote in return for more Medicaid funding, the increase would come to $432 million (a 5 percent hike in state spending), more than wiping out the extra funds she got in return for her vote. What is so myopic about this is that, not only will the amount of dollars she got be offset due to the costs on the state from day one, the "pay off" will only benefit for a limited period of time. The new cost on the state will be annual and without an expiration date.

  • In Indiana, where the more moderate (by Democrat standards) Evan Bayh is senator, spending would go up by $586 million. This is a significant increase of 4 percent.
    Ben Nelson of Nebraska has been one of the health care bill's stronger Democrat critics. His state will require an additional spending under the bill of $81 million, a 2 percent increase.

  • The pain continues to other states, as North Dakota, home of Senators Kent Conrad and Byron Dorgan, will face a spending increase of $14 million, and in South Dakota, represented by moderate Democrat Tim Johnson, Medicaid spending would have to rise by $33 million.

These increases in spending do not include the direct cost that will have to be carried by Americans in federal tax. This bill remains complicated and the extent of the financial injury it provides only grows daily.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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