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Republican Governors: Health Care Bills Omit Reform

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Twenty Republican governors and governors-elect sent a letter to Congressional leaders today urging them to refocus and pass “meaningful health care reform, not hastily prepared partisan legislation which omits reform and saddles American taxpayers for generations to come.”

“Governors of both parties have said for months how bad this bill is for the states and our nation,” said RGA Chairman Haley Barbour.  ”Now is the time for leaders in Congress to finally listen and restart this process so they can get health care reform right.”

The governors criticized the lack of transparency in the legislative process and called the current health care bills “a lost opportunity to improve the lives of Americans, create a sustainable system of health care and help stabilize both our state and national economies.”

The governors highlighted that the House and Senate bills fail to fix the broken Medicaid and Medicare systems and instead entitle 15-20 million more people to Medicaid.  The net result of this expansion “will be a significant cost shift to those privately insured around the country” and will further damage already hurting state budgets.

They also criticized the inflexibility forced upon states in the current bills. The governors write that the current proposals would eliminate the ability of states to negotiate Medicaid provider rates and force the states into a one-size-fits-all, federally-designed health insurance exchange.

Last, the governors urged Congress to take steps to create a system, which “eliminates red tape, empowers consumers to engage in making good health care decisions in the private market, and guarantees affordable coverage for patients with preexisting conditions.”

Full text of the letter can be found below:

Dear Senator Reid, Senator McConnell, Speaker Pelosi, and Representative Boehner:

As governors, we believe the reform of the health care system can be very beneficial to our nation’s economic future and the well-being of our citizens; however, the current health care bills are a lost opportunity to improve the lives of Americans, create a sustainable system of health care and help stabilize both our state and national economies.

Health care reform should be about fixing our broken Medicaid and Medicare systems; instead, the current health care bills entitle 15-20 million more people to Medicaid. While providing health care to low income individuals is important, the net result of this entitlement expansion will be a significant cost shift to those privately insured around the country. According to the Congressional Budget Office (CBO), the unfunded mandate to states and territories is $25 billion; although many states disagree with that figure. For example, Texas costs are estimated to be $21 billion over ten years.

The National Association of State Budget Directors (NASBO) has demonstrated states/territories are in no position to comply with the maintenance of effort provisions found in the bills or to accept any increased costs or additional administrative burdens to expand Medicaid. State general fund expenditures have dropped for the second year in a row. The December 2009 survey shows that the budget situation faced by states truly is unprecedented. Many states cannot afford their current share of the Medicaid program, and they will also have to face a funding cliff whenever the stimulus-enhanced FMAP dollars are exhausted.  States have already been forced to cut vital services with 30 states cutting education, 29 states cutting Corrections, and 28 states already cutting Medicaid.

Current federal proposals would strip the states of our ability to negotiate Medicaid provider rates, and we believe that states and territories should be allowed to negotiate Medicaid provider rates as found in current law.  The pending bills cause states and territories to lose money through the bills’ treatment of the prescription drug rebate provisions.  States and territories also should not be asked to forego a share of the savings from any new Medicaid rebates collected for the dual eligible population receiving prescription drugs through the Medicare Part D program.

These bills also impose a one-size-fits all federally-designed health insurance exchange and the insurance rating rules tie states’ and territories’ hands.  Health insurance exchanges desired by any state should be state-based and state-designed to ensure maximum state flexibility to design and operate exchange mechanisms that facilitate the purchase of insurance. Utah should not be forced to replicate Massachusetts’ exchange, and vice versa.  In the same vein, the health insurance rating rules should account for the existing variation in state and territory statutes and the state and territory should retain the authority to provide oversight and adopt tighter rating bands if necessary.

In order to pay for the bills, the legislation cuts Medicare $571 billion in the House bill and $466.7 billion in the Senate bill. Also included are far-reaching massive tax increases which will impact American individuals and families at all income levels. From employer mandates and taxes on high-value insurance plans to taxes on both branded and generic drugs and medical devices, these bills are funded, and thereby the bills’ costs are lowered, by taking more from taxpayers and reforming the health care system less. In particular, the Senate’s $6.7 billion insurance premium tax will be passed directly to consumers and will impose new costs on Americans who already have coverage. The unfunded mandates to states likely will require many states to necessarily raise taxes, too.

Although CBO has scored the Senate bill at $842 billion and the House bill at $1.3 trillion both bills are full of budget gimmicks.  The bills delay spending until the fourth year and exclude the costly “Doc Fix” which ignores the over $200 billion price tag associated with stopping the unavoidable cuts to physicians under the Medicare program.

Governors agree we should work to enhance the quality of health care while making it more affordable and efficient. Unfortunately, the opportunity to truly lower the cost of care has been lost in the rush to try to finish health reform. Both CBO and the Chief Actuary of the Centers for Medicare and Medicaid Services have warned the current legislation will increase the overall costs of health care. The federal government and the states should refocus efforts to lowering the cost of care which will in turn increase coverage, but simply increasing the number of individuals on the public plans without a plan to improve the public programs for participants is irresponsible.

At this juncture, small businesses, seniors, states and territories, and taxpayers have anxiety about Congress’ pending health care legislation and rightfully so– one-sixth of our GDP is at stake.  As Republican Governors, we believe in a system which eliminates red tape, empowers consumers to engage in making good health care decisions in the private market, and guarantees affordable coverage for patients with preexisting conditions.  Missing from this important legislation is real medical liability reform and provisions which protect seniors’ Medicare benefits and access to care.  Several states have already implemented medical liability reform with good results; no real medical reform can be accomplished without tort reform.  Instead, premiums are increased and small businesses are faced with onerous mandates rather than given the power to pool together and offer health care at lower prices, just as corporations and labor unions do.

Along with the majority of Americans and as leaders of 20 states and territories, we are disappointed with the lack of transparency. We urge you not to circumvent the normal committee process and to conduct an open, fully-bipartisan negotiation.  It is time to slow down and pass meaningful health care reform, not hastily prepared partisan legislation which omits reform and saddles American taxpayers for generations to come.

Sincerely,

Governor Bob Riley, Alabama                            Governor Jan Brewer, Arizona

Governor Sean Parnell, Alaska                           Governor Charlie Crist, Florida

Governor Sonny Perdue, Georgia                        Governor Felix Camacho, Guam

Governor Linda Lingle, Hawaii                           Governor C.L. “Butch” Otter, Idaho

Governor Mitch Daniels, Indiana                        Governor Bobby Jindal, Louisiana

Governor Tim Pawlenty, Minnesota                    Governor Haley Barbour, Mississippi

Governor Jim Gibbons, Nevada                          Governor John Hoeven, North Dakota

Governor Don Carcieri, Rhode Island                 Governor Mark Sanford, South Carolina

Governor Mike Rounds, South Dakota                Governor Rick Perry, Texas

Governor Gary Herbert, Utah                             Governor-elect Bob McDonnell, Virginia

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