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The Baucus Bill Cost To States And Working Families
Posted By Dennis Smith On October 2, 2009 @ 11:16 am In Obamacare | Comments Disabled
After watching the Senate Finance Committee work its will on health care reform, it is clear that the final stretch will have little to do with good policy and lots to do with cutting special deals with drug companies, favorite states, and the like. The debate is a jarring reminder that the current Congress views health care as a giant pie (indeed 16-17 percent of our entire economy). Of course, government does not make the pie, it merely cuts the pieces.
The folks back home still want an answer to the question that matters most to them—“how will this affect me and my family?” Families understand how much they make every month, not necessarily where they stack up on the government poverty line. The reality is Congress is making (more) arbitrary decisions based on budget implications. If you make $10 a month too little, you go to Medicaid where it will be cheaper to serve you because of government price controls on providers. Good for government budget, good luck to you to find a doctor or dentist. States that are already broke are faced with the burden of additional costs through mandatory expansions and benefit mandates.
The Center on Budget and Policy Priorities (CBPP) recently translated  the Baucus Plan into actual dollar amounts for families at different income levels . In its illustration, CBPP assumed that the cost of the silver plan would be $11,080 using 2009 figures. According to CBPP, a family of three at 150 percent of the federal poverty level (FPL) will have to spend 5.5 percent of income on their premiums (deductibles and copayments not included), or $1,571 under the Baucus Plan. The government therefore will provide $9,509 ($11,080-$1,571) in assistance to this family.
In 2009, Medicaid will spend $2,876 for a full year coverage of a child and $4,078 for a full year coverage of a non-disabled adult. So for a family of three (1 parent, 2 children) on Medicaid, the government will provide $9,830 in assistance. This cost is split between the states and the federal government depending upon the match rate for that state. Minnesota, for example, would pay 50 percent of this cost and the federal government would pay 50 percent (ignoring the temporary federal increase that will expire). Assuming Minnesota spends at the national rate for Medicaid, it would therefore spend $4,915 for a family of three that is currently on Medicaid for a full year.
Under the Coburn-Burr bill in the Senate, a family of three at 150 percent FPL would receive a tax credit of $5,710 (all federal funds) plus $3,000 in supplemental financial assistance (half paid by the federal government, half by the states) that can be used to purchase a more generous health plan or pay for deductibles, cost-sharing, or the direct purchase of care for a total of $8,710 in assistance. This is $799 less than the family would receive under the Baucus Plan according to the CBPP figures. However, Minnesota would be required to pay only half of the supplemental instead of half of the total Medicaid cost for a state savings of $3,415 ($4,915-$1,500). If Minnesota shared half of its savings with the family, the family would be better off than under the Baucus Plan and still save money for the taxpayers of Minnesota.
Under the Baucus Plan, Minnesota would receive an enhanced match for a newly enrolled parent (but not a currently enrolled parent). Even with the enhanced match, Minnesota would still pay $3802 for a Medicaid family whose parent is newly enrolled compared to just $1500 under the Coburn-Burr bill.
There is one way the taxpayers of Minnesota would be better off under the Baucus Plan than under Coburn-Burr—drop Medicaid coverage entirely for the parent. There are many unintended consequences lurking in health care reform. Congress has engaged in a high risk strategy because it does not really know how employers, states, and individuals are going to react to the confusing and sometimes conflicting policies.
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URL to article: http://blog.heritage.org/2009/10/02/the-baucus-bill-cost-to-states-and-working-families/
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 recently translated: http://www.cbpp.org/cms/index.cfm?fa=view&id=2922
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