Payments to states emerges as major obstacle to healthcare reform

Some House Democrats believe their states would get shortchanged in the overhaul of the nation’s healthcare system and the funding issue is fast becoming a major hurdle to getting a bill signed into law.

How much of a burden states would have to shoulder for a proposed Medicaid expansion is the latest friction point between the House and the Senate, and is threatening to blow a hole in the measure’s price tag.

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“There’s a lot of angst right now from members from states like New York and California over this,” a senior Democratic aide said.  “And there’s a growing concern that these states are getting the short end of the stick. And that’s particularly frustrating because it was members from these states that carried this bill to the point we’re at now.”

Lawmakers from these states and others are disgruntled because states that already offer more generous Medicaid coverage would be offered less additional assistance than states with relatively smaller programs.

While liberal House Democrats have yielded to the upper chamber on many issues, a growing number of House Democrats – liberals and centrists alike – are beginning to push back hard in opposition to a deal between Senate Majority Leader (D-Nev.) Harry Reid and Sen. Ben Nelson (D-Neb.) that exempted Nebraska from shouldering any of the cost involved in expanding Medicaid services.

Notwithstanding the Nebraska provisions, the Senate bill offers less assistance to states for the Medicaid expansion than the House bill.

But now, with the clock winding down and without an indication that the deal giving Nebraska full reimbursement is off the table, a new coalition of House members is warning that they'll be compelled to stick up for their states, even at the risk of stalling momentum at the eleventh hour.

Rep. Anthony Weiner (D-N.Y.) called it the last potential deal breaker from the perspective of House Democrats.

“It’s not so much a problem that Nebraska got [100 percent Medicare reimbursement],” he said. “We in the House thought everyone should get something like that, that we shouldn’t just expand Medicaid and then just cost shift it to the states. It would obviate everything we’re doing on stimulus and everything else by trying to relieve the burden on the states.”

Nelson on Friday sent Reid a letter asking that the “specific exemption for the State of Nebraska be removed, and that it instead be replaced with a provision giving all state governments the same treatment regarding the state match for the new Medicaid expansion.”

A response from Reid and the White House was not immediately available. 

Some House Democrats concede that an atmosphere of urgency is beginning to envelop the discussions – a phenomenon some of them admitted was the result of the very real prospect of losing their 60th Senate seat on Tuesday when Massachusetts voters go to the polls.

“There’s a general sense that we’re compromising a lot of stuff, that the White House is in favor of getting what they can as quickly as we can,” Weiner said.

House and Senate leaders returned to the White House at for a three-hour negotiating session Friday, a few hours after House Democrats met privately with former President Bill Clinton, and on the heels of a Thursday negotiating session with President Barack Obama that stretched past midnight.

“I think we're getting very close,” House Majority Leader Steny Hoyer (D-Md.) said during a Friday morning appearance on CNBC. “I would certainly hope that within the next 24, 48, 72 hours, we have a general agreement between the Senate and the House.”

Thursday’s talks produced a breakthrough on one of the more contentious issues of how to pay for health reform when leaders agreed to impose an excise tax on so-called Cadillac health insurance plans.

The deal on the legislation’s main revenue-raising component was hailed as a significant step forward, and prompted bold statements from White House officials and congressional leaders about just how quickly the rest of the agreements could be hashed out.

Democrats acknowledged Friday that any agreement they reach in the coming days on the “overall bill” could sidestep politically difficult matters such as abortion and immigration provisions.

“There’s going to be follow-up meetings on those issues next week,” Rep. Jan Schakowsky (D-Ill.) said, explaining that they were being put off in favor of working primarily on the main components of the bill.  “Those issues need to be talked about on a member-to-member level.”

Democratic leaders and congressional staff planned to work through the weekend to speed the package toward its final form. The White House indicated that Obama will not hold or attend additional healthcare meetings this weekend. “The next step,” the White House stated, “is to evaluate the costs and savings associated with the various proposals for each tenet of the legislation.”



Imposing the excise tax but broadening the exemptions left leaders to figure out how to make up for the lost revenue, which would be in the tens of billions of dollars over the next decade. But even by Friday afternoon Democrats would only acknowledge that it was something they would need to address.


“I cannot discuss it because [of] the expression, ‘until everything is agreed upon, nothing is agreed upon,’” Ways and Means Chairman Committee Charles Rangel (D-N.Y.) said Friday. “And no matter what we have now, it’s subject to change. And things have changed from yesterday to today.”

House Speaker Nancy Pelosi (D-Calif.) addressed her Caucus on Friday morning, telling members that the final bill will contain some House provisions but not yet specifying which, according to a Pelosi spokesman.

Weiner said later that negotiations are “trending” toward the creation of a national health insurance exchange, as favored by the House over the state-based exchange in the Senate bill.

“The White House has put its finger on the scale, it seems, for the national exchange, and I think that is one of the few things House members think we’re getting,” Weiner said.

Democrats are working feverously to reach agreements on the parameters of the bill’s insurance expansion structure so they can send language – along with the tax portion – to the Congressional Budget Office (CBO) as early as Saturday for analysis.

It was unclear, though, whether CBO would be able to provide a thorough enough of an assessment of the bill’s cost, and its impact on the deficit and healthcare spending, without a number of critical components that are still the subject of intense negotiations.

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