Budget grief hurts state programs

April 1, 2011

States face huge budget deficits in the coming months, threatening their ability to maintain health, education and public safety programs.

WASHINGTON-States face huge budget deficits in the coming months, threatening their ability to maintain health, education and public safety programs. The resource squeeze is making it hard for states to implement a host of critical health reform initiatives.

Initiatives include stronger rate review programs, new medical loss ratio (MLR) requirements and health insurance exchanges, mandated by the Patient Protection and Affordable Care Act (PPACA). The reform legislation further calls for states to expand Medicaid programs to cover some 16 million to 20 million additional uninsured individuals, which many local officials consider impossible.

FUNDING SHORTFALLS

A big help has been the $100 billion in additional federal support for Medicaid programs, but that additional money stops July 1, even though Medicaid enrollment has skyrocketed in many states. Medicaid now insures 53 million Americans and accounts for more than $350 billion in annual spending.

The situation has fueled a clamor for relief from state leaders, as seen at the March NGA Washington meeting. President Barack Obama responded by offering earlier access to "super waivers" that would exempt a state from complying with PPACA, the individual mandate and exchange programs-provided its alternative system can meet the new standards and coverage requirements.

"These are interesting times for people in state government," said Susan Voss, Iowa insurance commissioner and president of the National Association of Insurance Commissioners (NAIC), at the National Policy Forum, sponsored by America's Health Insurance Plans (AHIP) last month. States now face "more of a nightmare," she said.