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The Federal Government’s Sham: “Flexibility” for States

March 8, 2017

Ever since the passage of the Affordable Care Act, aka Obamacare, the Republicans have claimed they have a better and less costly way of providing health care. With a Republican President and majorities in the House and Senate, the GOP now has an opportunity to repeal and replace it. But, as the NYTimes op ed contributors Ezekiel J. Emmanuel,  note, their proposal falls far short of their pledge to provide the same level of coverage for a lower cost… and it appears to benefit the wealthy and the private insurance companies at the expense of the elderly, the poor, and those struggling with ongoing medical conditions.

One especially flawed element of the new health care act proposed by the GOP had a familiar ring:

The Republicans say they want to give states more flexibility. But that flexibility most likely means they could use the money for non-health-care programs, or to close state budget gaps. When given budgetary flexibility with large sums of money, this is a common state tactic.

In 1998, as part of a major settlement with tobacco companies, in which the companies agreed to pay Medicaid costs related to lung cancer, emphysema and other smoking-related illnesses, states got a windfall of a minimum of $206 billion over 25 years. What did they do with the money? A 2001 Government Accountability Office report found that 26 percent was being spent on non-health programs, including infrastructure and budget shortfalls. A mere 7 percent was spent on programs related to getting people to stop smoking…

State flexibility is a ruse. Per-person allotments are an elaborate cost-shifting mechanism — a fancy way to reduce federal funding and transfer financial responsibility for the health care of low-income Americans to states.

The “State flexibility” ruse is not just limited to health care for low income Americans. ESSA just gave the states flexibility in education spending. How much of THAT money will go to schools that serve low-income students— the group the federal dollars were earmarked for in previous federal education laws? And even if Kansas, for example, used the medical funding to help establish a more equitable allocation of funds that their Courts offer, if the practice in other states is any indication the group most likely to suffer would be the poor and elderly.

The other element of the GOP plan that sounds familiar is the formula that applies a per-person limit on how much the federal government spends on Medicaid. If a state has a dip in employment that leads to more people requiring Medicaid they either have to cut the benefits to current health care recipients and offer everyone a higher price plan or change the qualifying parameters to reduce the number of poor people who are eligible for the benefit. This is analogous to the special education funding formula, which was supposed to increase over time based on the number of identified students and the cost to provide services to this children. It hasn’t done so and the result is a shift of costs to the states and ultimately to local property tax payers.

The notion of “flexibility” is appealing to voters, as is the seemingly commonsensical notion of a per-person limit. But both of these ultimately reduce the level of health care or shift the burden to another level of government or eliminate government services altogether. Someday, everyone is likely to pay some kind of extraordinary costs for the health care they need. The more we pool resources, the lighter everyone’s burden will be when that day comes. Obama care took us a bit closer to the fairest means of funding health care. The GOP is moving in the opposite direction.

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