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The Senate Health Bill: Medicaid and CLASS Act Provisions

Posted By Dennis Smith On November 19, 2009 @ 5:20 pm In Ongoing Priorities | Comments Disabled

The 2074 page Reid Health Bill (H.R. 3590 [1]) generally follows the Senate Finance and HELP versions on Medicaid and in the creation of a new health care program, the Community Living Assistance Services and Supports (CLASS) Act.

Curiously, in the short term (2010-2013), the Reid bill helps fewer people gain coverage than the Senate Finance bill. The Congressional Budget Office (CBO) estimates [2] 2 million will lose Medicaid/SCHIP coverage each year in this period compared to current law. But, by 2019, Medicaid/SCHIP enrollment will increase by 15 million, accounting for nearly half of all individuals who will gain coverage.

More Welfare. The Reid bill expands Medicaid eligibility for people below 133 percent of the Federal Poverty Level (FPL), significantly changing it to a pure income based federal entitlement. It also raises, then lowers, the federal matching rates for different populations and states. In a provision aimed at Louisiana, the Reid bill provides a special “disaster recovery” match rate for states that have had a major disaster declared (Section 2006). CBO estimates that state spending under the Medicaid provisions will still increase by $25 billion.

Of course, there are millions of persons at or below 133 percent of the federal poverty level who get private health insurance. The Reid bill would, based on all previous experience, guarantee a further crowding out of private health care coverage.

States will be alarmed at the aggressive encroachment of federal authority over the management of the Medicaid program. The provisions of Section 2801, Medicaid and CHIP Payment and Access Commission (MACPAC) are clearly intended to increase federal officials’ direct control over the program. In addition, states will become vulnerable to federal lawsuits by individuals under the expanded definition of medical assistance provided in Section 2304. This will likely be used to overturn recent federal court decisions won by states that limit private lawsuits against them.

The Reid bill will allow legal immigrants who have been prohibited from receiving public benefits, including Medicaid, for 5 years from the date of entry into the U.S. to become eligible for the new federal subsidies. Curiously, this raises an equity issue that has been overlooked: there would be 60 million U.S. citizens excluded from the new, generous federal subsidies. Instead of receiving the new subsidies, the Reid bill would create a rigid, two-tiered system of health care. Individuals at the lowest income levels would be forced into Medicaid, while individuals at higher income levels will qualify for generous subsidies worth more than Medicaid on a per capita spending basis. The Reid bill further promotes this class- based inequity by allowing non-citizens to secure the federal subsidies while lower income Americans cannot.

A New Program. Despite concern and criticism that the CLASS Act is not fiscally sound over the long term, it has been included as a budget gimmick. The federal government will collect revenues for 5 years before paying out any benefits. This allows the Reid bill to offset the cost of the Senate bill by $72 billion over 10 years.
The CLASS Act would create a new federal program for long-term care insurance to compete against private insurance. Individuals who have paid into the program for 5 years who experience limitations in their activities of daily living will become eligible for cash benefits. These limitations do not meet the current disability test which opens the program to abuse.


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URL to article: http://blog.heritage.org/2009/11/19/the-senate-health-bill-medicaid-and-class-act-provisions/

URLs in this post:

[1] H.R. 3590: http://democrats.senate.gov/reform/patient-protection-affordable-care-act.pdf

[2] estimates: http://cboblog.cbo.gov/?p=426

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