With governors in town, HHS tries to soothe fears about health law

With most of the nation's governors arriving in Washington on Friday for a weekend conference, President Obama's health department is making the case that the new healthcare reform law provides money and flexibility to states wrestling with massive budget deficits.

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The sweeping healthcare overhaul enacted 11 months ago has already provided or offered $2.8 billion in funding to the states, a “fraction” of total funding available under the law, according to a new Health and Human Services Department (HHS) report. Further, the law reduces state and local governments’ burden to care for the uninsured by $70 billion to $80 billion between 2014 and 2019, HHS said.

The report comes as most governors descend on Washington on a mission to reduce their Medicaid responsibilities. Facing billion-dollar budget gaps, states say they cannot afford the reform law’s requirement to maintain Medicaid eligibility standards until 2014. Earlier this year, 33 governors and governors-elect urged HHS Secretary Kathleen Sebelius to waive the so-called “maintenance of effort” Medicaid requirement.

HHS also reinforced Friday that states have the flexibility to design new health insurance exchanges opening in 2014. Almost half of the governors demanded to have greater control over the exchanges in an early February letter to Sebelius.

The report wraps up a week in which HHS announced plans to deploy billions to the states. This week, the department has offered up as much as $4.3 billion to Medicaid programs to improve home-health services, $200 million to conduct reviews of “unreasonable” insurance rate hikes and $100 million to encourage healthier lifestyles.

In the report, the department makes the case against GOP lawmakers’ efforts to repeal or choke off funding for reform law implementation, saying it would rob the states of valuable resources.

"Such action would take away precious resources from states at a time of fiscal challenge and leave their citizens with fewer choices, higher costs and less protection,” HHS wrote.