Governors Of Mississippi And Nebraska Express Concerns With Unfunded Mandates In Health Reform
Madam Speaker, I rise today to express concerns regarding health reform proposals which would create unfunded state mandates. Legislation currently before the House would dramatically expand the Medicaid program and place over $35 billion…
Madam Speaker, I rise today to express concerns regarding health reform proposals which would create unfunded state mandates. Legislation currently before the House would dramatically expand the Medicaid program and place over $35 billion in new liabilities on state budgets over the next ten years. In addition, these proposals would expand the federal government's role in administering Medicaid, which would severely handcuff states' ability to run their own programs and preempt state authority to manage Medicaid eligibility and benefits.
Over the last several weeks, governors have expressed concerns over these proposals. I would like to submit for the Record the following letters from the governors of Mississippi and Nebraska:
August 6, 2009.
Hon. Gregg Harper,
Cannon HOB,
Washington, DC.
Dear Congressman Harper: As Congress debates healthcare
reform, I want to raise a few issues of concern with the
policies being considered in both House and Senate bills.
Healthcare reform is truly a bipartisan issue; after all,
Republicans and Democrats understand that our healthcare
system faces significant challenges--from steadily increasing
medical costs to confusing insurance provisions. As the
national debate continues, it is important that everyone
realizes the severe impact the proposed legislation would
have on states like Mississippi.
As Governor, I am particularly concerned about the
direction the Senate and House are taking in regards to
Medicaid expansion. Instead of discussing policies to reform
a broken system, the debate in Congress has shifted to
finding ways to fund an expanded Medicaid program at the
state level. At the end of the day, both the Senate and House
proposals are unfunded mandates, which, for states like
Mississippi, would result in burdensome and costly changes to
the system.
For example, when we talk about sharing the cost of an
expanded Medicaid program, Mississippi would pay another $333
million annually under a larger program covering up to 150
percent below the Federal Poverty Level (FPL). A Medicaid
program covering up to 133 percent FPL expansion would cost
an extra $297 million. In many states, funding the current
Medicaid programs robs other critical programs. The same is
true for us. Each year we struggle to cover our Medicaid
expenses while providing for essential services including
public education and public safety.
While there has been some discussion at the federal level
to assist states in paying for this expansion, my staff
learned last week that the Senate Finance Committee is
proposing to cap the amount of federal money distributed to
the states to pay for this expansion at $40 billion over 10
years. Estimates show the cost of expanding the Medicaid
system to all states at the lowest level, or 133 percent FPL,
is $30 billion per year. At 133 percent FPL, states would be
saddled with Medicaid expansion costs in the second year of
expansion.
These projections are overwhelming as Mississippi, like all
states, continues to grapple with budget realities. Our
General Fund Revenue collections for July 2009 are 11.27
percent below our estimate. Compared to the prior year,
collections for this July are 21.43 percent or $56.3 million
below what was collected in July 2008. During Fiscal Year
2009, Mississippi's revenue was $390 million short of the
revenue estimate, causing most of state government, except
for education and Medicaid, to take approximately a 6 percent
cut in the Fiscal Year 2010 budget.
Our Fiscal Year 2010 budget included $523 million in
stimulus funds; otherwise, we would have faced even more
significant cuts. It will take our state years to catch up,
and that's without a $297 million or $333 million Medicaid
state-share increase.
Further, the proposed healthcare reform legislation also
includes numerous tax increases to finance significant
expansions of government-run healthcare. Different versions
of the House legislation incorporate a payroll tax on small
businesses. Although the recent House Energy and Commerce
Committee agreement included an 8 percent payroll tax for
small businesses with an annual payroll of $500,000, previous
versions taxed small businesses with a payroll of $250,000.
This tax will do nothing more than punish wage and job
growth, especially when you consider that the tax rate
increases as the size of payroll increases. According to the
National Federation of Independent Businesses (NFIB), such
employer mandates could cost 1.6 million jobs with more than
1 million of those jobs lost in the small business sector.
That means higher taxes for Mississippians, since 96.7
percent of our employers are small businesses. In addition,
the Senate HELP Committee proposal requires employers to
offer health coverage to their employees and contribute at
least 60 percent of the premium cost or pay $750 for each
employee that is not offered coverage.
Language in the proposed legislation also would mandate an
individual to purchase health insurance and, should he be
unable to afford such coverage, he'll be slapped with a 2.5
percent additional income tax for the coverage. But the
proposed legislation goes even further, taxing higher income
individuals beginning at $280,000 and families at $350,000 on
a sliding scale.
This language generates a massive tax increase on high
income filers, more than half of whom are small business
owners already being taxed if they do not provide health
insurance to their employees. A tax increase in the middle of
a recession, with unemployment rising, is not the answer.
Besides increasing taxes, the House bill cuts Medicare
nearly $500 billion. These cuts include reductions to
Medicare providers and hospitals, while gutting Medicare
Advantage by $150 billion to $160 billion. Admittedly, I am
baffled as to why Congress would propose slicing funding for
a program that our seniors support and that provides for
their health and well-being.
As Congress heads home for the recess, I urge Members to
review the proposed legislation with their state leadership.
I am primarily concerned about the effect this legislation
may have on Mississippi's financial stability, both now and
in the future. These so-called ``reforms'' would severely
impact Mississippi's budget and our ability to fund other
important priorities, like education and public safety.
Before Congress makes such sweeping reforms to our healthcare
system, I implore you to first ensure that these changes are
efficient and beneficial to our citizens, without burdening
our states through unfunded mandates.
Sincerely,
Haley Barbour,
Governor, Mississippi.